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Trying hard to hold gap.. still short of H&S target.. maybe spike down into the closefehro wrote:SPX nears neckline it goes.. target Fri's gap 1873
tsf wrote:
Big bet: Large cap benchmark to go down -30% ???
http://www.cboeoptionshub.com/2016/01/2 ... money-put/
FUTURES | MARKET NEWS | TRADER TALK | VIX | JAN 25, 12:39 PM
Block Trade Analysis – Russell 1000 Long Dated Out of The Money Put
BY RUSSELL RHOADS, CFA
We all know that 2016 has not started out too well for either small or large cap stocks. This morning a large trade was executed in the Russell 1000 Index (RUI) option pit that appears to be based on fear (or hope) that bearishness in the large cap equity segment continues.
Just before 11:00 am Chicago time, with RUI at 1041.59 a buyer of just under 3000 (2980 for the quants) RUI Dec 850 Puts paid 33.00. We have no idea what the motivation is here, it could be a bearish call on the market or hedging a portfolio that is tied to the large cap focused Russell 1000. Either way, the payoff at December expiration appears below.
Break even for this deep out of the money put purchase is at 817. This is a price level not seen by the Russell 1000 since just over three years ago. Also, on top of what the Russell 1000 has already accomplished this year that would place the large cap benchmark down almost 30% for 2016 for this trade to work out.
Russell Rhoads, CFA, is Director of Program Development for the Options Institute at the Chicago Board Options Exchange. He joined the Institute in 2008 after a career as an investment analyst and trader with a variety of firms including Highland Capital Management, Caldwell & Orkin Investment Counsel, and Millennium… read more