This may be one of the most volatile weeks the markets have seen in a long time. With all the crazy events of the past few weeks the VIX has skyrocketed. That goes hand in hand with alot of puts being bought, many more than usual. And stocks fell hard. On Friday all these March options will expire. Then you also have the sub prime insanity. Many many holders of puts in NFI, NEW, FMT, LEND and CCRT will have profits to take somehow. In addition the broader markets have been much more volatile lately. And now after an almost 50% retracement of the initial decline the markets could potentially fall very far just to retest the recent lows. If this drop did begin to happen then all the put sellers would have to cover themselves somehow. By shorting the stock or else preventing it from falling by buying tons... So it goes both ways, I would expect the sub-primers to pop huge next week because there are no shares available to short. As for the rest of the market, lets see the second wave down to complete a simple ABC correction. Click the CME chart above, I think it would move big this week.
Max pain for a few sub primes:
NEW: $12.50, currently $3.21
NFI: $20.00, currently $5.24
These are the most attractive.
Also, many of the big wall street firms post earnings this week and they will be big movers, for more on that situation check out my new favorite blog: The Kingsland Report.
Disclosure: I have CME and CCRT puts.
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