Some option buyers are placing bets on the end of the financial world. I cite the way out of the money September calls on TLT and VXX. The Sep calls on TLT (20 year Treasury fund) and VXX (Volatility fund) have value even 20 points out of the money. It would take something like a 10% down day in the Dow to bring those way out calls into play. With that, I am reluctant to sell those calls. Most times I have thought to myself, "that's free money," when looking at selling certain options, there was something I wasn't seeing that the option buyer did know or see.
The other factor might be that those buying these way out calls are using them as part of a more complex strategy. Only rarely are way out calls bought in quantity as a pure speculative play. Mostly they are offset with other options, or futures, or equities.
As for the stock market, I expect lower lows, testing 105 on SPY (118.1 today), though hopefully not immediately. As for bonds, tougher to call because of all the Fed games and manipulations. Gold might see some more short covering, and a retest of the recent highs might be a place to take a shot at the short side.
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