Sell GS via buying back short Oct 70 puts
Panic! Blood in the streets after House vote thumbs down on the bailout bill. The bill has failed. Some serious arm twisting went on trying to garner more votes, but as of this writing the bill has failed.
I am following my trading rules and covering for a big loss, as much as I think something will be worked out, if not today then tomorrow. I typically set a mental stop at a 100% move against me on the option premium. With the fast moving market, the GS puts are a bigger loser than 100% (on the premium amount). Still, it is a relatively small loss in dollar terms. This loss puts me at about break even on my short term trades for the year. I think a lot of folks would be happy to be break even for 2008, though of course, a tiny percentage has timed the swings well and made hay. A larger group is likely wiped out entirely, especially those that tend to double down when the market moves against them.
I do not see this as a time to be the hero and stand against the tide. Little fish tend to all get swept away when they go against the tide. It certainly isn't a low risk time to be short, or to be buying puts either. Position traders like myself are too slow moving to react when the market is swinging widely.
No trading positions
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