S&P Put Options and this month of Oct, 2011

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Index Options 'Hints' October Stock Collapse

 

Index Options allow the investor to bet for or against an entire Stock Index. For example, an S&P 500 Index Option is a bet that all 500 companies that make up the S&P 500 will go up or down. As I have stated before, money doesn't disappear from the stock market, it simply changes hands. The stock market is simply a barrel of money and Put Options are the cork in the bottom of the barrel.

 

Much has been written about the sale of Put Options against American Airlines prior to 911. That, my friends, is chump change when compared with the amount of money made with S&P Index Options as a result of the market collapse that followed 911. Volume in Index Options actually doubled in the months leading up to 911 from the previous year.

 

Now we have an even more dramatic scenario unfolding

 

1. Open Interest (which indicates a desire to Buy or Sell Index Options) normally stands at a few hundred contracts on any expiration date. A Contract must be created in order for it to be considered an Open Interest.

 

2. As of 9/19/11, the S&P 500 stood at 1204. Their are three types of Put Options, "At the Money" (strike price is 1204), "In the money" (strike price is above 1204), or "Out of the Money" (strike price below 1204).

 

3. A 1204 Strike price, October Option cost $4,000. A 1310 Strike Price is now valued at $17,000. That means with a 105 point drop in the S&P 500, the average Index Option increases 400% in value.

 

4. Remember, Open Interest on Put Options normally stands at less than 1,000 Contracts. Here is what October Put Options that Bet Against the S&P 500 look like for October, 2011:

 

Open Interest: Strike Price:

 

12,467 500

17,893 650

67,816 750

116,406 800

51,789 850

27,742 875

64,123 900

20,392 925

52,737 950

26,701 975

90,031 1,000

117,902 1,100

127,798 1,150

127,036 1,200

 

TOTAL: 919,000 Contracts (Source:

hyyp://www.marketwatch.c0m/investing/index/spx/options

 

Normal Open Interest: 14,000 Contracts or less.....

 

Difference: 900,000 more Put Options Than Normal

 

This means that for every 100 points the S&P drops in October, about 18.4 billion dollars will change hands. If the S&P loses 1,000 points, 184 billion dollars will change hands.

 

I say change hands, from the seller of the Put Option, which would be a Mutual Fund that is Indexed to the S&P 500, to the Buyer of the Put Option, which will be the Illuminati Banksters, Hedge Funds, etc... looking to steal your money. All they need is the right excuse to start selling into the market and/or dumping shares of those companies that make up the S&P 500.

 

The above gains do not include the trillions of dollars made by those that are holding Put Options on the large cap companies that make up the S&P 500. Companies like Google, which is now trading at $553.00 per share, and has a market capitalization of over 178 billion dollars. In fact, the total S&P 500 has a market capitalization of over 4.83 trillion dollars.

 

"According to Standard & Poor’s, the S&P 500 Index represents 75% of the U.S. equities and may be considered a proxy for the overall market. Stocks that make it into the S&P 500 index must be U.S.-based (determined by the “plurality” of revenue and assets), liquid, trade on a major U.S. exchange and have at least a $4b market cap."

How far is this true? Or is it just a rumor?