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Strategies & Market Trends : The Stock Market Bubble

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To: Tommaso who wrote (2568)	1/18/1999 1:26:00 PM
From: Kip518	Read Replies (1) of 3339

T -- I assume in the bear market Bollinger is describing as your LEAPS expire with paper profits you may have a difficult time collecting. No one will want to buy your put (i.e. open-ended put sellers and option MMs have all gone bankrupt or quit the market) or the stock underlying it. A put is only a contract to buy. In a severe market decline, contracts will be quickly broken as the players fall out. The options market has never experienced a severe market decline. Even more than the general market, it will suffer extreme liquidity problems. The game will not continue to be played under the "old" rules. As for cash, it makes money only if someone (with good credit) is willing to pay you for it. Good credit will also become scarce. Who knows what is going on with gold? T-bills, probably the last bastion as the gov't can print money to cover, but during the last depression government notes went to negative returns (as Japan is now experiencing). Not a pretty picture.

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