1: The strong upward slope that brought us here, as I illustrated in a previous post, were caused by the policies of (Quantitive Easing) and ZIRP (Zero Interest Rate Policy). When the American economic growth is self-sustaining, these policies have to end, bringing a significant market correction.
2. The amazing recovery over the last week had two underlying stimulants: the FED's assurance that ZIRP would end no time soon, and evidence that the American economic recovery is now self-sustaining. Ultimately these are two contradictory forces, since self-sustaining economic growth calls for an end to ZIRP.
3. I can hear the cocks crowing, which always happens on the eve of a market collapse. voices are drowned and the market's champions encourage the fools with promises of even greater profits to come. The louder they shout the clearer the message becomes: we want to sell at the right price!
Suppose I have 10k$, what might I do next? Possible strategies are:
1. Buy 400 shares of SH (1xShort S&P 500) (as price at the moment is ~24$)
2. Buy 400 shares of SDS (2xShort S&P 500) (as price at the moment is ~24$)
3. Buy 400 shares of SPXS (3xShort S&P 500) (as price at the moment is ~24$)
4. Sell 2 ES December futures (as price at the moment is ~2k$, and margin requrement ~5k$)
5. Buy 10000 184.00 december 31 put options of SPY (as price at the moment is ~1$)
6. Buy 10000 195.00 december 5 put options of SPY (as price at the moment is ~1$)
7. Buy 5000 195.00 december 31 put options of SPY (as price at the moment is ~2$)
Good scenario: price of SPY drops to 180 by the end of the year
Bad scenario: price of SPY fluctuates between 195 and 205 by the end of the year
Nightmare scenario: price surges to 220 at the end of the year
That would be best possible strategy of mentioned above in you opinion?