David, I'm in much the same boat, 2/3 down (stunned) and trying to figure out what to do. Short put positions that were quite safe 2 weeks ago (5K here, 7K there) are way out of whack (40K here, 40K there). I've thought about it and posted on my options thread and here's what I think:
There are too many like you and me, so this carnage will continue next week. Therefore go to all cash asap. I'm going to do that in brokerage and keogh. Remember, cash generates 100% margin whereas many of our favorite stocks genreate 50%.
With my cash I am going to repair my short put positions out to 01 or 02, by that I mean, buy them back (makes me sick) and then sell them further out and a lower strike, taking in the same amount--so essentially I'm back to square one, but with a longer time frame and no loss. That gives me ample recovery time but not nearly as much playing room.
With whatever is leftover, I am taking about 20% of that and buying puts on the NAZ itself, probably (QQQ). I believe we are going lower short-term. With the $ gained from those puts, I will invest sometime this spring. I truly am concerned about Greenspan raising rates again in May--he really could do it, another .25 to "lock" in this crash. As someone pointed out, he only lowers rates when the economy is threatened, not the market.
And we will rebuild. I think this weekend is a great time to discuss strategies. |
