Market Correction This Year?

[Ian]

Just interested to see what peoples feelings are on the market and what the general consensus is on the rest of the year.

The results are shown once you've voted.

[smith]

how does one vote?

my own view is very bleak and that there will be a correction Sep/Oct 09 (lots of reasons, main one being the the US Consumer is dead for the time being; US houses to continue to fall; governments can't keep stimulating forever; more bank issues and failures ahead eg commercial properties; less disposable income for the consumer by virtue of more regulation and higher taxes etc etc). This could continue for years to come eg Japan and I hope I am wrong.

Going forward, if one were to acquire cheap puts and sell expensive call against these-that could be a winning strategy.

these are only my views and are probably wrong

[Ian]

Hi Smith,

you need to be logged in to vote, guests are not allowed to vote on polls, presumably to stop people doing multiple votes...

Just out of interest could you expand on the cheap put, expensive call method mentioned. Do you mean buy long puts now and if the market drops, sell in the money calls as the stock drops?

Thanks

Ian

[smith]

if you are long Puts with a relatively low implied volatility of say 25 (currently). if there is a correction, the volatility would spike to say 35. so your puts become more valuable (due to the rise in vol) and you can sell calls for more money (again because of higher vol).