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Strategies & Market Trends : Investing during a Bear Market -- Ignore unavailable to you. Want to Upgrade?

To: Vol who wrote (103)	11/10/1997 8:00:00 PM
From: Bilow	Read Replies (1) \| Respond to of 226

Some links and calculations for index options pricing: Link for all the CBOE Dow calls/puts: webservices.pcquote.com Tonight, the Sep 8800 Dow put (DJXUJ) closed with an ask of 13 1/8 = $1312.50. Therefore, you will make money if the Dow opens the third Friday of September below $8800 - $1313 = 7487. The time premium must have gone up since I posted last time. Anyway, if the Dow opens that day at 7553, you will end up with $8800-7553=$1247, or a 5% loss. If the Dow opens that day at 8200 - 30% = 5740, then you will end up with $3060. Same thing for the CBOE SPX calls/puts: webservices.pcquote.com Tonight, the Sep 1125 SPX put (SPTUE) closed with an ask of 189 1/4 = $18925. Therefore, you will make money if the SPX opens the third Friday of September below 1125 - 189.25 = 935.75. The SPX closed today at 921.13, if it was at that value again on that fateful fall day, you would end up with (1125-921.13)100 = 20387.00, a reasonable 7.7% return. In the event of a 30% correction from its peak of 983.12, your return would be (1125 - 983.12 .7) * 100 = $43682, a handsome profit of 130.81%. The SPX put looks like a better deal to me. (BWDIK) Of course, in either case you could lose all of your investment, but at least you wouldn't have to worry about a margin call. -- Carl