Pirates and Put Options How They Can Steal You Blind!
What is a Stock Option ? <ul><li>A Stock Option is the right to buy or sell a basket of stocks at a set price (usually in ...
Options are Cheaper! <ul><li>Than owning the actual stock. </li></ul><ul><li>For example:  You want to buy 100 shares of P...
When you Buy an Option … <ul><li>You can rent the 100 shares from someone that actually owns the stock. </li></ul><ul><li>...
Lets pretend I Buy … <ul><li>4 shares of Pyrate for $320 because I think the price is going up over the next 30 days. </li...
If I had bought an Option <ul><li>I could have paid $320 to “rent” the stock for 30 days at the guaranteed price of $80 pe...
But…. <ul><li>The guy that let me “rent” the stock for 30 days would have had to sell his 100 shares to me for the agreed ...
In the World of Options <ul><li>Someone always wins. </li></ul><ul><li>And Someone always loses. </li></ul>
You can Also Make Money … <ul><li>When the stock price goes down. </li></ul><ul><li>This is called a “Put” Option. </li></ul>
Here is How a “Put” Option  Works <ul><li>I think that Pyrate is going down in price. </li></ul><ul><li>I pay you a “premi...
You have to Cover the Option! <ul><li>If the price of Pyrate goes down $40 per share in the next 30 days you still have to...
You lose $4,000 ! <ul><li>I buy 100 shares of Pyrate at $40 per share and sell it, according to our Option Contract, back ...
Before 9/11 <ul><li>Someone bought millions of dollars in “Put Options” against American Airlines and other Airline compan...
That Someone (s) … <ul><li>Made 100’s of millions of dollars when the Airline stocks “tanked”! </li></ul>
But, that’s “Chump Change” <ul><li>Why Buy a Put Option against 1 company when you can “short” a whole bunch of companies ...
What if… <ul><li>You could buy a “Put Option” against the entire S&P 500 Index! </li></ul><ul><li>Or the Dow? </li></ul><u...
With the S&P 500 <ul><li>You could “short” 500 of the largest corporations in America! </li></ul><ul><li>You could make bi...
How About … <ul><li>Your Mutual Fund…they have millions of dollars to lose. Of course, its only  your  money they are putt...
Or Even … <ul><li>Your State Employee Retirement Plan. </li></ul><ul><li>Your Company 401K Plan </li></ul><ul><li>Your IRA...
No-ones That Stupid ! <ul><li>Why it would take a whole band of Pirates to orchestrate such a heist!!! </li></ul>
One on the “Inside” <ul><li>Using your money to guarantee the Index Value!   This guy “sells” the Put Option. </li></ul>
And One on The Outside .. <ul><li>This Guy Buys the Index Put Option at just the right time! </li></ul>
And One More Pirate … <ul><li>Who knows of some major event that is going to shake the Western World so hard that it will ...
But Hey, That Would Take a Conspiracy !!! <ul><li>And who wants to be called a conspiracy theorist? </li></ul>
Have You Read the News ? <ul><li>NEW YORK (Reuters) - The Dow Jones industrial average and the S&P 500 turned negative aft...
Now Here is Where You Feel  That “Sinking Feeling” <ul><li>“ There are 65,000 contracts @ $750.00 for the SPX 700 calls fo...
Someone is Betting That <ul><li>The S&P 500 Index which closed on 8/31/07 at  1473 will drop below 700! </li></ul><ul><li>...
That Means … <ul><li>Someone(s) bought  65,000  Put Option Contracts that expire in less than 21 days! </li></ul><ul><li>I...
What Do They Know ? <ul><li>They are betting $4.5 Billion dollars on a guess? A Hunch? What?   </li></ul>
Could It be … <ul><li>A major Terrorist Attack on United States soil that makes 9/11 look like “child’s play”? </li></ul>
Looks like Someone Just Placed a  Major Bet Against America! <ul><li>$65 BILLION DOLLARS!!!! </li></ul>
If They are Right … <ul><li>They could end up with  half  of the money that is now in the Stock Market … </li></ul>
Here’s Hoping … <ul><li>None of It Belongs to You! </li></ul>
 
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Pirates And Put Options

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Are They Conspiring to Steal your Retirement, Savings and everything else in the Stock Market???

See: http://www.moneyteachers.org/stocks.htm if you don't understand stocks or mutual funds.

Published in: Economy & Finance, Business
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Pirates And Put Options

  1. 1. Pirates and Put Options How They Can Steal You Blind!
  2. 2. What is a Stock Option ? <ul><li>A Stock Option is the right to buy or sell a basket of stocks at a set price (usually in lots of 100). </li></ul>
  3. 3. Options are Cheaper! <ul><li>Than owning the actual stock. </li></ul><ul><li>For example: You want to buy 100 shares of Pyrate Stock, where one share costs you $80. </li></ul><ul><li>You would have to put up $80 times 100 </li></ul><ul><li>It would cost you $8,000 for 100 shares of Pyrate stock. </li></ul>
  4. 4. When you Buy an Option … <ul><li>You can rent the 100 shares from someone that actually owns the stock. </li></ul><ul><li>You pay a very small premium for a short rental period (IE: 30, 60, 90 days.) </li></ul><ul><li>You can benefit if the stock goes up or down. </li></ul>
  5. 5. Lets pretend I Buy … <ul><li>4 shares of Pyrate for $320 because I think the price is going up over the next 30 days. </li></ul><ul><li>I am right and Pyrate goes from $80 a share all the way to $100. I sell all 4 shares for $400. </li></ul><ul><li>I made $20 times 4 shares of stock = $80 </li></ul>
  6. 6. If I had bought an Option <ul><li>I could have paid $320 to “rent” the stock for 30 days at the guaranteed price of $80 per share. </li></ul><ul><li>I would have controlled 100 shares of stock. </li></ul><ul><li>I would have made $20 on 100 shares of stock= $2,000 for the same investment of $320. </li></ul>
  7. 7. But…. <ul><li>The guy that let me “rent” the stock for 30 days would have had to sell his 100 shares to me for the agreed upon price of $80 per share. </li></ul><ul><li>He would have lost $2,000 when the stock went from $80 to $100!!!! </li></ul>
  8. 8. In the World of Options <ul><li>Someone always wins. </li></ul><ul><li>And Someone always loses. </li></ul>
  9. 9. You can Also Make Money … <ul><li>When the stock price goes down. </li></ul><ul><li>This is called a “Put” Option. </li></ul>
  10. 10. Here is How a “Put” Option Works <ul><li>I think that Pyrate is going down in price. </li></ul><ul><li>I pay you a “premium” of $320 to guarantee that you will buy 100 shares of Pyrate for the current price of $80 per share for the next 30 days. </li></ul><ul><li>You have to put money aside to “cover” the Put Option contract. </li></ul>
  11. 11. You have to Cover the Option! <ul><li>If the price of Pyrate goes down $40 per share in the next 30 days you still have to buy 100 shares from me at $80 per share no matter what! </li></ul>
  12. 12. You lose $4,000 ! <ul><li>I buy 100 shares of Pyrate at $40 per share and sell it, according to our Option Contract, back to you for $80 per share. </li></ul><ul><li>I make $40 times 100 = $4,000 </li></ul>
  13. 13. Before 9/11 <ul><li>Someone bought millions of dollars in “Put Options” against American Airlines and other Airline companies! </li></ul>
  14. 14. That Someone (s) … <ul><li>Made 100’s of millions of dollars when the Airline stocks “tanked”! </li></ul>
  15. 15. But, that’s “Chump Change” <ul><li>Why Buy a Put Option against 1 company when you can “short” a whole bunch of companies at the same time. </li></ul><ul><li>This used to be illegal! </li></ul><ul><li>Not anymore! </li></ul>
  16. 16. What if… <ul><li>You could buy a “Put Option” against the entire S&P 500 Index! </li></ul><ul><li>Or the Dow? </li></ul><ul><li>Or the Nasdaq? </li></ul><ul><li>Or any other index out there? </li></ul>
  17. 17. With the S&P 500 <ul><li>You could “short” 500 of the largest corporations in America! </li></ul><ul><li>You could make billions or even trillions of dollars in a few short weeks! </li></ul><ul><li>But, who would be stupid enough to guarantee a “Put Option” in a declining market? Who has that kind of money to lose? </li></ul>
  18. 18. How About … <ul><li>Your Mutual Fund…they have millions of dollars to lose. Of course, its only your money they are putting at risk. </li></ul>
  19. 19. Or Even … <ul><li>Your State Employee Retirement Plan. </li></ul><ul><li>Your Company 401K Plan </li></ul><ul><li>Your IRA </li></ul><ul><li>Your SIMPLE plan </li></ul><ul><li>All invested in the stock market… </li></ul>
  20. 20. No-ones That Stupid ! <ul><li>Why it would take a whole band of Pirates to orchestrate such a heist!!! </li></ul>
  21. 21. One on the “Inside” <ul><li>Using your money to guarantee the Index Value! This guy “sells” the Put Option. </li></ul>
  22. 22. And One on The Outside .. <ul><li>This Guy Buys the Index Put Option at just the right time! </li></ul>
  23. 23. And One More Pirate … <ul><li>Who knows of some major event that is going to shake the Western World so hard that it will bring the entire U.S. stock market into a free-fall within the next 30 days. </li></ul>
  24. 24. But Hey, That Would Take a Conspiracy !!! <ul><li>And who wants to be called a conspiracy theorist? </li></ul>
  25. 25. Have You Read the News ? <ul><li>NEW YORK (Reuters) - The Dow Jones industrial average and the S&P 500 turned negative after midday on Thursday, rattled by a report that nerve gas had been found at the United Nations headquarters.ABCNews.com reported that United Nations weapons inspectors discovered six to eight vials of a dangerous nerve gas, phosgene, as they were cleaning out offices at a U.N. building in New York this morning.&quot;We don't yet know if that's true or not but it's very unnerving,&quot; said Todd Leone, head of listed trading, Cowen & Co. in New York.The Dow Jones industrial average was down 12.11 points, or 0.09 percent, at 13,277.18. The Standard & Poor's 500 Index was down 1.83 points, or 0.13 percent, at 1,461.93. The Nasdaq Composite Index was up 14.74 points, or 0.58 percent, at 2,577.90. (9/1/07) </li></ul>
  26. 26. Now Here is Where You Feel That “Sinking Feeling” <ul><li>“ There are 65,000 contracts @ $750.00 for the SPX 700 calls for open interest. That controls 6.5 million shares at $750 = $4.5 Billion. Not a single trade. But quite a bit of $$ on a contract that is 700 points away from current value. No one would buy that deep &quot;in the money&quot; calls. No reason to. So if they were sold looks like someone betting on massive dislocation. Lots of very strange option activity that I haven't seen before.” </li></ul>
  27. 27. Someone is Betting That <ul><li>The S&P 500 Index which closed on 8/31/07 at 1473 will drop below 700! </li></ul><ul><li>That means the Buyer of the Options Believes that the stock market will lose over 50% of its current value by 9/21/07 (when the options expire!) </li></ul>
  28. 28. That Means … <ul><li>Someone(s) bought 65,000 Put Option Contracts that expire in less than 21 days! </li></ul><ul><li>If something doesn’t happen to drive the S&P below 700, they will lose $4.5 billion in Premiums ($750 per contract). </li></ul>
  29. 29. What Do They Know ? <ul><li>They are betting $4.5 Billion dollars on a guess? A Hunch? What? </li></ul>
  30. 30. Could It be … <ul><li>A major Terrorist Attack on United States soil that makes 9/11 look like “child’s play”? </li></ul>
  31. 31. Looks like Someone Just Placed a Major Bet Against America! <ul><li>$65 BILLION DOLLARS!!!! </li></ul>
  32. 32. If They are Right … <ul><li>They could end up with half of the money that is now in the Stock Market … </li></ul>
  33. 33. Here’s Hoping … <ul><li>None of It Belongs to You! </li></ul>

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