Getting Worse Before It Gets Better

BearishBoring rally this morning, and we’re not buying it (either literally or figuratively). Dow now hovering around 30, not a bad time to grab some negative deltas if you need them, and if you’re into that sort of thing.

Also, here’s some good reading from Nouriel Roubini: The bloodbath in credit and financial markets will continue and sharply worsen. The gist is that the major financial institutions are valuing large portions of their assets by the relatively voodoo-tastic mark-to-model model. Merrill was the only firm to come clean for awhile because it only had 2% of its assets in this predicament, so it’s basically the only firm that can afford to admit its problem. You can’t read stuff like this and not want to get short the financials in a big way. The problem is that these banks and brokers are still also the largest hedge funds in the world, and they’re not going to go down without a fight. So do we worry about the state of our economy (along with the state of our country, our culture, and our Constitution)? You bet. But that sentiment often isn’t tradeable.

[tags] Dow, Roubini, Merrill, credit, financials [/tags]

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Jared Woodard specializes in trading volatility as an asset class. With over a decade of experience trading options and other volatility products ... Read More


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