Mike,
I bought a OEX 460 / 440 bear spread (bought the 460's, sold the 440's) for October, and as you can see, it didn't work. A couple of things are at work here (IMHO):
1) There is SOOOOO much negative phychology that since everyone
expects this market to go down, it won't. Aren't many people waiting for a crash?
2) Maybe, just Maybe, 70% of the value drop was taken and been experienced and we base here or slightly lower, holding 7800, for a slow climb. Very slow climb. Up 1 back 7/8, kind of climb. Is the market discounting all this news and looking in the end of 1999? Early 2000? Maybe.
3) I personally can't see what upside this market could offer now, but it's moving up. Maybe it's the good stock. Maybe the crash comes after expiration. What's moving this market up? People think "earnings are not sooo bad, after all?" Buy these stocks cheap, at 1996 levels, or lower. That's compelling to many ONLY LONG stock buyers.
4) I am writing covered calls again on many of my stocks because the premium is there, oh....is it there.
5) I want to write a bear spread again on the OEX, but it's hard to pick the point. I might do a bear spread (485 465) for Nov this time.
Sorry for the ramblings, but I am confused by today's action (not hurt by it, but confused...)
Regards,
Steve |
