Pre Market Comments Monday January 28. 2008

7.50 AM CET

New York fell 1.5% Friday.
Tokyo, Shanghai, Singapore and Hong Kong falls sharply this morning.
Loom and doom talk in Davos.

This is the making of shaky times.
The big question this week is the FED’s response.
Arguments can be made for 0, 25,50,75 basis points cut.
We don’t want to play that game.

We are taking some profits today and selling our short maturity (yes we have some February) put options today and moving them into longer maturity. We like April (first quarter results will be horrible for the financial sector), or January 2009 or even better 2010 for safety.
Yes, if the FED does not cut, and the crash comes now the short term ones will boom most.
But we don’t want to get caught in FED crossfire like last week.

“Yielding is the way of the Tao.”
Lao-tzu

Our main position remains, sell everything and short this market.
We really are playing tow games at the same time.
We are shorting the market, and recommending that.
On top of this we are playing the short short game. That is day to day movements.
You should decide what side you are on.
9/10 of our readers should just short long term.
Buy January 2009 put options on the OMX30 index.
I will find a good specific contract for you today, January 2009 at around 10-20% down from current levels, just a little more down than most really thinks is possible. Something between Put 890 – 850 – 780 for January 2009.
Find one that is inexpensive, and that has volume. Place yourself high in the bid order and get orders taken out during the day.

The OMX30 put contract we recommended December 13 had strike at 1100.
The OMX30 closed at 961 on Friday at maturity.
We bought it for SEK 21 on December 13 and will now be paid 139 on settlement.
Those of us who held it all the way made 660% – congratulations.

The gains may not be as spectacular this time.
But there are still huge gains to be made.
There is still way to much confidence out there.
The market holds up.
Opportunities.

Share
This entry was posted in Finans. Bookmark the permalink. Both comments and trackbacks are currently closed.