posted on Aug, 16 2013 @ 11:54 PM
One part of the OP article that IMHO needs considering is this.
But deciphering what Soros was thinking when he upped that SPY put position is not so easy. As Baron notes, we don’t really know the precise
structure of target dates and holdings. The fund could have increased that SPY put anytime in the second quarter. Joseph from the Baron further said
this when asked about the significance of Soros’s move: “The last time SPY puts topped the Soros Fund was in the 30th June 2011 filing and we
saw the S&P 500 lose 15%+ over the 6-7 weeks following, over July/August (during which time Soros reduced the position substantially). The position in
2011 was less than half the size of the current one which makes me think he might be anticipating a larger decline on this occasion.”
I'm not by any means a Soros fan, but the dude knows how to make money in the markets.
Unless you're gambling puts are best used as insurance against declines that would affect other positions, and there are a myriad of strategies in
which to use them, and unless you know the particulars of how they are being used there isn't a lot you can say about it.
The article admits that there isn't a lot of detail about the position. I don't know what source material the source article is working from the
article is written as if they are all "long" puts, but what if the report from the fund only lists the position not whether it is "long" or
"short"? If it's a short put position then the bet is that the market will go up and any premium earned from the put the fund gets to keep as the
Some of the reasons I could think of aside of knowledge or fear of an impending crash are:
Normal hedging, maybe even with an eye toward an overdue correction due.
Some type of play to make a profit off potential increases in volatility.
Calendar spreads to capture time value.
Taking advantage of perceived mispricings.
Complex option strategies to do a little bit of all of the above.
I think portraying this as a single bet for an impending correction (long overdue IMHO) is being more than a little sensational, but I'm still glad
it was reported on. I took a quick look through the various expiries for the SPY ETF and there are some pretty large open interest amounts on both the
call and put side of the options chains, but that is pretty common for the SPY. There are current options available for the SPY all the way out to DEC
2015 so the bet could be for any month or combination of months from now until then.