Posted by: jhamon | July 23, 2009

MysteryHedgie Presents… Cuidado!

The latest from MysteryHedgie:

The panic from the shorts and the underinvested Beta players since the US market open today has been palpable.  To add to this, perhaps the largest 4 legged put trade ever in the SPY,  a total of 720,000 contracts, has printed. Suspicion is that the trade may have been generated internally by a well known  sell side firm looking to reduce its VAR.  SPX is within shouting distance of 990-1000, and the rest of the macro space (bonds, oil, and particularly today, Japanese Yen) behaves correctly, but option trades of this high a profile often represent turning points.  Time to look at your book position  by position and trim where appropriate; things may feel rosy,  but the last time NDX rose to the sky, US unemployment was 4%, today it is 9.5%.                                              


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