re: "What play to the short/put side would be the best."
I've got 9% of my money in Nasdaq 100 puts, bought between 9/14 and 9/24. My reasoning is:
1. I'm not clever enough to pick individual stocks that will go down most if the market tanks.
2. good liquidity on the qqq options, and I've had good luck "negotiating" with the market maker to decrease the spread I pay.
3. this index comprises the big cap techs. These stocks, collectively, are the most "in-favor" group, and are the most overvalued. Although they have high earnings growth, their PEs are even higher. Going through the top 10 companies (its a market-cap weighted index), they are all at the top of their historical valuation range, and that range is wide. Their PEG ratios are all 2 or worse.
4. I see inflation in 2000 (for reasons posted earlier). When that happens, PEs will contract, and the highest PEs will contract the most.
5. The other groups that have led the market over the last 3 years (financials, drugs, internets, etc) have all stumbled, one by one. The big cap techs are the only ones where I can still buy puts at the very top. I hope its the top, anyway.
6. If I had to pick individual stocks, I'd pick PFE, AOL, and MU as the most puttable. |
