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Politics : Welcome to Slider's Dugout

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From: SliderOnTheBlack	8/19/2007 9:44:40 PM
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Perspective on Subprime & Foreclosures: Here's a graphic that I think puts things in perspective: While I'm not saying that financials and particulary, the subprime sector weren't due for a significant haircut (no one could have been more bearish on subprime than I've been), I think forced selling always leads to trading opportunities. I always mention discrepancies between price and risk. Here's a picture (chart) that shows it, better than words explain it... I want to find companies/stocks that have significantly outperformed their peers and the market over the longterm: But, who get oversold during this chaos in the nearterm: And then who will hopefully revert to their longterm outperformance once the dust settles. The great thing about this volatility is that by selling deep out of the money puts... you got paid double digit/$10+ premiums for being willing to take in GS if the selloff deepend. These amounted to 6% to 8% premiums that got banked on the September expiration. And I've still got some rich double digit premiums hanging out from October to Jan... which pays me well to be willing to buy GS from $130 to $150 should that strike be seen. SOTB

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