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Strategies & Market Trends : Investing during a Bear Market
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To: Vol who wrote (98)11/10/1997 7:09:00 PM
From: Bilow  Read Replies (1) of 226
 
Instead of selling the DOW or SPX futures, because of the high
premium that they trade at, you can cheaply purchase put options
on the future.

As I noted on the Kahuna thread some time ago, if you purchase
a deep in the money put on the September 1998 Dow future,
you will end up making money (even after spreads) just as long
as the Dow ends up lower or the same in Sep. 98. At that time,
you wouldn't get wiped out unless the Dow got to 8800. And
the return for a declining Dow was pretty reasonable. (I think it
was about 100% return if the Dow declined 30% from its summer
peak.) All in all, a safe investment for someone who wanted to
go short the market with someone else's money, or who didn't
want to risky all theirs.

-- Carl
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