So where do we go now?

Published on August 22, 2007

So where do we go now?

August 22, 2007

(for details pls visit www.OptionPundit.net)

Just last week, it seemed the markets were in pain. Sorry what, pain? Today Shenzen (China) is again a new 52wks high, a whopping 300% gains over last one year. Ok, let’s talk Hong Kong which is a much more mature market, really? Well not 300% but it’s also not very far from making a fresh high. The same story holds true for most other Asia stock markets. What has changed in last one week? Discount rate cut? Well, I don’t know how much will that help. But one thing is there, we are yet to see more pain, check out excellent post on bloomberg by Mark Pittman “Commercial Paper Market Roiled With $550 Billion“.

One thing has surely changed, perspective. And that is, FED is about to rescue the US stock market. How much of that is true, only time will tell us. Unless it really dips below 12,500 levels, we can’t yet say that we are in bearish market. Overall, the market trend is still bullish and 8-12% correction is considered quite healthy.

As long as markets continue sideways action, premium sellers are going to have good time as IV will subside over a period of time, thus double bonanza (Theta and IV) if delta is managed well. Choose your strategies right, favor the credit spreads, IC, butter flies, etc. (Positive Theta, Negative IV and hopefully Delta neutral).

Cheers and enjoy the ride, profitable trading, OP

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