How much did you lose in the stock market meltdown?
- Thread starter stinkynuts
- Start date
About SARS, my friend and I were debating several weeks back about moving our money out of equities. He said he would not since the stock market did not drop during SARS. I disagreed and sold. He kept it in and is since down $2m+
Just adding what happened during SARS is not predictive of what is going to happen now
Very unlikely. This is just the beginning, not even the beginning of the end, or even the end of the beginning.
The corona virus spreads exponentially, infection 2-3 people for every person inefected. The US has many untested people likely unknowingly infecting dozens, who in turn are are affecting dozens. Look at how Italy went to a couple hundred cases to 20,000 now, with many dead. The aftermath of this is still in its infanncy. Experts are saying 70% of the population will be infected.
This is a limit down action they stop trading in the future to prevent more losses but it can swing up.
Fed cut the rate to 0.25% ... Dow futures dropped 1000 points after being on positive territory most of the weekend. Asian markets are down. Expect Monday to be bad for many except you were on the opposite of a long futures contract beforehand.
VBB
I think the market is being manipulated.
The big hedge funds, some of them have gone bust, and the margin calls lead to liquidation of all their positions, leading to these wild price swings and strange action.
Look at the TLT. Institutions like to trade that because it more liquid, if we can believe the financial news. The TLT chart looks too weird the last few days.
This is all opaque. With stocks, there is the short interests, and the futures we have open interest. But what Wall Street is doing today, who know who holds what.
The big hedge funds, some of them have gone bust, and the margin calls lead to liquidation of all their positions, leading to these wild price swings and strange action.
Look at the TLT. Institutions like to trade that because it more liquid, if we can believe the financial news. The TLT chart looks too weird the last few days.
This is all opaque. With stocks, there is the short interests, and the futures we have open interest. But what Wall Street is doing today, who know who holds what.
How much did you lose in the stock market crash?
If you sold nothing you lost $0.
2 years ago I bought 3.2% GICs for ~22% of the portfolio just in case shit happens. The S+P goes up up up then has a major runny shit, haven't done the math yet but the GIC's have broken even the last 3 weeks.
Shit just happened.
If you sold nothing you lost $0.
2 years ago I bought 3.2% GICs for ~22% of the portfolio just in case shit happens. The S+P goes up up up then has a major runny shit, haven't done the math yet but the GIC's have broken even the last 3 weeks.
Shit just happened.
circuit breakers are in place at a predefined percentage point for indices and individual securities to curb panic selling. reset following trading day
The DOW has plummetted another 10%, or 2300 points as of now, and is at 20,900, down from 29,000 before the free fall.
How about I give you an example:
This is a simplified example it would take too long to go into all the details.
When they started to restrict air plane flights you should have seen an opportunity to either short the stock and/or purchase or go long puts (option to sell a stock at a certain strike price during the short term/limited duration) usually out of the money (if the stock is trading at near $50 ex Air Canada in January the strike price of $40 would be lower than that with a short maturity, I'll skip intrinsic value for now and other factors). Now let's skip to the present and that stock has gone down dramatically but your put option has a strike price above the trading value, you can now sell it and make a profit equal to strike price - sale price, simple terms because there is also an intrinsic value because you did it before maturity, most tend to happen this way. This is called a naked put because your not hedged with the underlying stock to cushion your loss.
Simple math, excludes transaction costs and intrinsic value:
Cost of put $1, sale price $25, option strike $40, profit $14 per share
Each put contract is for 100 underlying shares
During times like these there are opportunities for greater returns and losses due to market volatility, in a few days or weeks you could make more than you did in a few years of steady market growth, but you have to study the markets and industries/sectors and most importantly don't be skidish. Plus your going to have to do several plays on different stocks plus other trading strategies, timing is very important.
Hope that helps but really options isn't for everyone. I've been doing this for 25+ years and to be honest I don't like to give advise because it just leads to more questions and I don't have the time, but made the exception today .. no PMs please.
VBB
