12/10/2015 Live Update

[Junior Buffett]

VIX not reflecting this move up since morning...we should go in red in the afternoon....

[gappy]

4 hour.

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Vote Cobra. glta

[gappy]

Daily.

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[Tutti]

Tutti,
Follow-on today at Zerohope, saying the banks are all using puts in their models so that they pass the stress tests.Article draws parallels to the Lehman moment where they were all buying CDS on each other and it changed the market. You remember that a couple of times a year the Fed's repos go through the roof for one day as all the big boys window dress their assets for their public financial statements, so I wonder if the giant pool of puts is the same sort of thing and not at all related to trading strategy.
http://www.zerohedge.com/news/2015-12-0 ... mise-again

I don't see much new here. The counterparty risk is always there, and could be systematic, just like LTCM back in the 98.

From a market perspective, they buy a put then it is consider composite selling. if market is up then some other funds are buying to pop it up.

if I understood what I read( and that is certainly and entirely a questionable bet), this looks to me something like this(Im using puts, but Im sure its some sort of swaption or other derivative): I bought a put on X, who bought a put on Y who bought a put on Z who bought a put me, who bought a put on x, who bought a put on Y...the entire circle is holding hands and they all have exposure to each others miscalculations whether they know it or not.

The fact that the first comparisons that came to mind were LTCM and Lehman, I would think there is a lot of meat on that bone to really chew through.

[gappy]

Up and down, around and around. Place your bets.

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[brokebybernacke2]

Up and down, around and around. Place your bets.

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ppi, retail sales , sentiment tomorrow
spx 2062/2063 is the 200 ma weekly and daily levels to bust for some bull pride...

[Out of Bounds]

I'm out.
Seeing weakness enter but not willing to short.

[josephli]

Tutti,
Follow-on today at Zerohope, saying the banks are all using puts in their models so that they pass the stress tests.Article draws parallels to the Lehman moment where they were all buying CDS on each other and it changed the market. You remember that a couple of times a year the Fed's repos go through the roof for one day as all the big boys window dress their assets for their public financial statements, so I wonder if the giant pool of puts is the same sort of thing and not at all related to trading strategy.
http://www.zerohedge.com/news/2015-12-0 ... mise-again

I don't see much new here. The counterparty risk is always there, and could be systematic, just like LTCM back in the 98.

From a market perspective, they buy a put then it is consider composite selling. if market is up then some other funds are buying to pop it up.

if I understood what I read( and that is certainly and entirely a questionable bet), this looks to me something like this(Im using puts, but Im sure its some sort of swaption or other derivative): I bought a put on X, who bought a put on Y who bought a put on Z who bought a put me, who bought a put on x, who bought a put on Y...the entire circle is holding hands and they all have exposure to each others miscalculations whether they know it or not.

The fact that the first comparisons that came to mind were LTCM and Lehman, I would think there is a lot of meat on that bone to really chew through.

Yep, exactly like LTCM. but that's nothing new. it is unfortunately that counter party risk is something usually underestimated in their derivative model.

[josephli]

Up and down, around and around. Place your bets.

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ppi, retail sales , sentiment tomorrow
spx 2062/2063 is the 200 ma weekly and daily levels to bust for some bull pride...

Retail would be likely to miss, IMHO. retail has been poor since Jan.

[Trades with cats]

Circular protection for the big banks doesn't make common sense but we are talking about the highest levels of financial wizardry and bank regulators and their track record has made Nassim Taleb a famous author.

To me the key is the Feds are requiring downside protection and CDS are no longer acceptable because Alan Greenspan and his hit man Larry Summers kept them unregulated.

Now Gandalf over at Citi is screaming look out the idiot algos will see this as a giant stop loss and run it if the market drops when the Fed increases rates. Well we are all aware of that now. I will take credit for bringing it up here and it was brought up by others over the next two days for a total of 4 posts that I saw. Since everyone knows it is no longer a surprise so in reality it is no longer an issue. Does not mean some fund won't try to run them anyway but the whole point is that they (the puts) are window dressing for the Feds, not a serious trading strategy. Sort of like hiring rules and posters in the break room.

[josephli]

Circular protection for the big banks doesn't make common sense but we are talking about the highest levels of financial wizardry and bank regulators and their track record has made Nassim Taleb a famous author.

To me the key is the Feds are requiring downside protection and CDS are no longer acceptable because Alan Greenspan and his hit man Larry Summers kept them unregulated.

Now Gandalf over at Citi is screaming look out the idiot algos will see this as a giant stop loss and run it if the market drops when the Fed increases rates. Well we are all aware of that now. I will take credit for bringing it up here and it was brought up by others over the next two days for a total of 4 posts that I saw. Since everyone knows it is no longer a surprise so in reality it is no longer an issue. Does not mean some fund won't try to run them anyway but the whole point is that they (the puts) are window dressing for the Feds, not a serious trading strategy. Sort of like hiring rules and posters in the break room.

what tutti was saying was that the big bank end up being counter party to each other in their intertwined derivative trading, without themselves knowing how much systematic risk there is. Once a major player goes down, like LTCM and Lehman, it will create a domino effect that brings down more player, as traders realize that those derivative contracts supposedly paying out big becomes worthless (as the couter party become insolvent).

[gappy]

Another six months of sanctions. This dude gets back down to 10 bucks, I be in it. Daily.

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[Cobra]

pullback too large but still 5th push up is possible. just it could be lower high.

[fehro]

SPX

[fehro]

ignore

[Al_Dente]

NYSE
Advancing stocks are 1.1 x declining stocks
Advancing volume is 1.5 x declining volume
Not enough yet to sustain a triple-digit up day

Bulls are trying to regain the short term trend
Bears need a big fail here, e.g.: lower lows

[gappy]

what tutti was saying was that the big bank end up being counter party to each other in their intertwined derivative trading, without themselves knowing how much systematic risk there is. Once a major player goes down, like LTCM and Lehman, it will create a domino effect that brings down more player, as traders realize that those derivative contracts supposedly paying out big becomes worthless (as the couter party become insolvent).[/quote]

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[josephli]

Looks like yesterday once more?

https://www.youtube.com/watch?v=YwxsWIYJI2A

[Cobra]

members only update at 12:18 pm
http://www.cobrasmarketview.com/2015/12 ... ay-update/

[uempel]

Update: