Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Classic TA Workplace -- Ignore unavailable to you. Want to Upgrade?

To: Win-Lose-Draw who wrote (127140)	12/15/2005 10:49:17 PM
From: skinowski	Read Replies (1) \| Respond to of 209892

If I understand you correctly (which may not be the case), you think of puts primarily as "cover", or - insurance, protection. But puts are also a vehicle for active speculation, for proactive bets on market decline. In this sense, high P may reflect bullish complacency, no? And even just as a "cover" - wouldn't a point come when there may be too many C's and other longs for the "P"s to cover - even at close strikes? Interesting thought about ranges. But - the markets - like SPX - were not truly in a range. For 2 years we see a series of higher highs, with the lows kind of catching up, giving the whole thing a wedge-like quality. SPX looks more like a wedge than a range, imo. And yes, wedges sometimes "hound" - they break out the "wrong way". But more typically, such patterns end in a reversal. classic low-probability, high-expectancy trade that speculators seem to hate LOL! That was... well said. A higher expected return may justify a trade with a lower probability. It's sort of contraintuitive, but it makes sense.