Split Strike Conversion Strategy

Trader MP explains the auto bail out perfectly:

http://twitpic.com/tacx

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And trader Floyd is now ready to talk about Bernie Madoff, and the 50 billion fraud. It is now being defined that Madoff used the OEX as a manipulative tool. Madoff traded on 13 billion in assets and many smart investment advisers were questioning that the OEX could handle the size of Madoff's trades. Remember, he never provided an electronic statement, but only his monthly summaries.

He used "split strike conversion strategy," which is designed to earn income off a stock portfolio while protecting big declines in the market. He traded examples to his subscribers "lost 14k on the call, made 21k on the put," but the ratios were wrong. This slimebag would claim (when properly totaled) trading 22,000 contracts, when records would show only 4,639 total contracts would even trade.

This is an example of where the OEX was used with his many clients within his definition of "hedge," yet he never even made the trades. It's utterly impossible for me to understand how this could have passed by regulatory structures, and is more proof that we need controls put in place.

This all began with Ronnie Reagan, the great de-regulator, and has continued for years. We trusted free enterprise, which is not really free, but always controlled by just a few.

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The market yesterday showed classic flatlining, allowing buyers to take new entry to the January 420P as low as 16.00 by 2.30 p.m.

Many professional traders right now disagree with one another.

School #1: the zero interest rate game will free credit with the banks, and the market will begin to stabilize, running to 9500.

School #2: it's a sum of no gain, and the zero interest rate game will do nothing. The market will fluctuate between 8200 to 9200.

School #3: the end is near, and the market could drop another 2000 points.



Floyd is in school #2. Follow our Dow projections carefully for "steps."