HomeSavvy investors are expecting a put option payoff in their day trading accounts this Christmas, while those without full options trading accounts are likely to get coal. The rest of the traders in the stock market who do have the ability to act on put options may have some significant opportunities ahead given the continuing shocks to the economy. Most of the market has had a significant run up since the lows of March however clearly the results have yet to reach main street. A stalled recovery that doesn't reach Main street is likely to hit the major market indices hard when the final numbers are tallied.
A Put Option Payoff on Market Indices Could Be in the Future
The late year rally in the Dow Jones and S&P 500 have been welcome news to investors with retirement accounts and 401Ks invested in those indices. Wise investors are taking advantage of the gains and present market liquidity by rebalancing money out of those stock funds and into safe havens such as money market funds, treasuries, and high return CDs. A put option payoff in these indices seems likely given the economic storm still roiling at home while two wars are prosecuted overseas.
Economic Storm Clouds Still Brewing - Reform Initiatives Stalled While Expensive Wars Continue
President Obama has been caught between a rock and a hard place in trying to make headway on domestic fronts while trying to manage two problematic war efforts. His health care initiative - designed to save money on treatments while expanding overall coverage is moving like molasses through the halls of Congress. Meanwhile 30,000 more troops are engaging in the Afgan war effort - costly in terms of both managerial and monetary resources, leaving less of both for needed reform efforts and stimulus spending.
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