Tautology of the Skeptical Sinner

While I’m thankful that confidence is surging again, I’m too plugged in to the economy to think that this is anything but a short term Bear Market Rally.

Don’t people read? Can’t they hear the desperation in the Real Estate and Automotive sectors? Don’t they understand that the tangled mess of the Subprime CDOs is still ready to bite?

I’m short on Citi and Bank of America, and I expect them to both drop substantially by the end of the year.

I don’t mind if I lose money on these options, because if I do - it will mean that the financials did manage to get their sh*t back together and that the economy won’t be in the deep freeze for much longer.

I’m going with a blend of Puts (Options) with Citi and Bank of America, Jan 09 date on the expectation that the value of these options will rise.

.CMC - 15.00 Strike Price (Meaning a 25% drop or worse, in the stock price of Citi between now and Jan 09) - Currently trading at $0.93 - I imagine any seriously bad news (Which I’m expecting) will put the value of this option up to $1.50 or more for a 50% + gain.

.BACME is another one I want to get in on, but the price right now is a little more than I would like. Its a strike price of $25.00, and trading at $2.04 today, meaning that Bank of America shares need to fall $8 - I would expect these to go as high as $4.00 if Bank of America gets more bad subprime fallout. My target price is around $1.80 before I buy these puts.

If you’re not familiar with Options, please keep in mind that it is essentially gambling. Never work options if you are unfamiliar with the risks.

If you’re looking for a long hold investment, I’m liking ACI - they’re coal, and if you don’t think that the Green Revolution is going to fly all the way, they’re definitely a sound long term aquisition as an exporter of coal. A Strong dollar, or Agressive Eco-legislation will push the price down further, but ultimately, Energy is a long term growth product, and there are tons of coal burning power plants around the world.