More Investors Are Betting On Major Selloff in Stocks

[EV_Ares]

Not everyone on Wall Street is convinced that the worst is over.

In fact, some investors are betting tens of millions of dollars that the market is headed for a selloff--a major selloff.


The reason: worries about a worsening credit crunch, along with speculation that the Federal Reserve may defy expectations and hold off on cutting interest rates at its Sept. 18 meeting.

So far, over $500 million in in so-called put options have been purchased betting that the benchmark Standard and Poor's 500 index S&P 500 INDEX.SPX will tumble anywhere from 5% to 11% in September. Some investors are even buying put options calling for 52% decline. A "put" option increases in value as the underlying stock or index falls.

To put it in perspective, a 5% drop in the Dow Jones Industrial Average would be the equivalent of 667 points. An 11% decline would equal 1,468 points. And a 52% drop? You don't even want to know.

The upshot is that some major investors are putting up big money that the market is facing a major decline.

(entire article @ link)

http://www.cnbc.com/id/20461003

[Beetwasher]

1. How Does One Get In On This Action And How Much Money

Is needed?

[youngdem]

3. Take a put position on a mortgage company stock, if you dare.

Remember though, the exposure on a put is potentially infinite, as the stock could go up.

An etrade account is all you need to play.

[cureautismnow]

2. I hope none of these "putters" are the same ones who...

putted the American and United Air stocks just before 9/11/01. :hide: