Jas Jain's Triggers For Buying and Selling Puts

-------- Original Message --------

Subject:	WeeklyTriggersForBuyingSellingPuts
Date:	Sun, 19 Dec 2010 12:16:40 -0800
From:	Jas Jain

Triggers For Buying and Selling Puts On Scams and Scam Indexes
One of the most important factors in how well one does in long puts strategy is when to accumulate long puts because a good selling opportunity could take a year or more (hence, I only advise buying LEAPS). When to sell the puts presents less of a difficulty


One obvious answer to when to buy is when the volatility, VIX/VXN, is low. That is when the prices are low and it happens mostly when the Scams have been going up for a while. Another useful tool could be sentiment, i.e., when the sentiment is very bullish. IMO, Put/Call Ratio is not very useful but Bulls Minus Bears seems to be a good trigger for accumulating puts when it reaches extremes of bullishness, I mean foolishness. Here is a chart of buy and sell triggers based on AND and OR operations on VIXN (I use average of VIX and VXN because I am overweight techs) and the weekly Bulls Minus Bears data from Investors Intelligence. As it turns out now is a good time to accumulate puts. No promises!
Jas

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as of 12/15/10