Massive Options Bet On More Downside on SP 500 After Ben Bernanke's Speech
Massive Options Bet On More Downside on S&P 500 After Ben Bernanke's Speech. Bernanke: No hints on QE3 from Federal Reserve. In this live "options trading video" SMF Options Traders will cover the June Regular Expiration S&P 500 1300 Put which closed at $9.45 and dropped down to $5.10 from the $8 high. There were huge block trades upwards of 1,000 contract size lots totaling 28,876 by 12:15 EST.
We bought and sold the S&P 500 1350 Call we bought between $.45 and $.60 with exits at $4.20 to $4.40 on the high of the day. The best SMF Options Trader hit over 800% returns on the contracts.
We nailed the low of these contracts and we're buyers and traders on both of these contracts going into the monthly expiration. Ben Bernanke offered no hints about further Fed stimulus in the opening remarks of his testimony Thursday before the Joint Economic Committee, instead calling on fiscal policymakers to put the nation's finances on a sustainable path.
Investors are speculating that the Fed could extend Operation Twist -- its program of swapping short-term bonds for ones with longer duration to help keep 10-year and 30-year bond yields low -- or launch a third round of asset purchases known as quantitative easing.
But Bernanke offered little to imply that such moves are imminent and instead repeated that the Fed will continue to monitor the economy and is prepared to act if needed.
"The Federal Reserve remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate," Bernanke said. Bernanke's testimony comes after other Fed officials, including Vice Chair Janet Yellen and San Francisco Fed president John Williams, indicated that more stimulus by the central bank might be necessary to boost the sputtering U.S. economy.
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