Given the state of world financial markets, credit, trade etc. and also thinking in terms of what I see and believe will be occuring within the next 12 months, I am interested in "shorting" the market. Does anyone have any specific advice on buying puts on the dow or S&P 500? I have a Fidelity account, and they (last I knew) restricted options to the Index's, or specific stocks,(not metals.) From a contrarians view (Kennedy, Getty, Rockefeller...the 1929 overnight millionaires,) now , with everyone talking DOW 10,000, and not knowing if wallstreets mainframes can handle the index turnover, It seems like a good time to go short. Any and all comments welcome.

Lou

-- Lou Stein (theknowzone@mindspring.com), April 19, 1998

Answers

Check out S&P 500 LEAP options. They're kind of expensive, but isn't most insurance? At least you can go out long term with these, say maybe December, 1999. Question is, if you go out past 1-1-2000, will you be able to collect??? Be advised you have to fill out proper forms before you can buy options through your Fidelity account.

-- Douglas Cole (dougnkim@gte.net), April 19, 1998.

There are some mutual funds that are setup to short the market. The Rydex family of funds have two...Ursa for stocks and Juno for bonds. There are some others...check with Schwab or your broker.

-- edgar cayce (edc41@sprintmail.com), April 19, 1998.

A good short fund is The Prudent Bear (BEARX). It is designed to do the opposite of the stock market, if the market goes down 25%, then this fund will go up 25-30%. In the down month of November 1997, the market was down 11% and the Prudent Bear was up 18%

Walter

-- Walter Whitehurst (walter06@wwisp.com), April 19, 1998.

Lou,

To find out how to purchase puts on indexes, you will want to look into LEAPS, as someone else mentioned. To find out about them, go to the Chicago Board Options Exchange website, where there is extensive information describing how they work. These are long-term options for two to three years. Their website is http://www.cboe.com/, and follow the trail of LEAPS. If you are purchasing LEAPS that extend past December 1999, you probably want to purchase those that have the style "American", which means they can be exercised at any time, versus the style "European", which can only be exercised just before expirati

-- Dan Hunt (dhunt@hostscorp.com), April 22, 1998.

Buy as far in advance as you are able based upon the strike price, buy neither puts nor calls alone, straddle an index for optimum flexibility and return if you expect any bi-polar volitility.

-- Jessee Murphy (Y2KB52@aol.com), April 22, 1998.

This does not directly answer your question, but in anticipation of a significant market correction because of Y2k, I have started buying precious metals and gold mutual funds.

-- Tom Lo (TLo8355097@aol.com), May 24, 1998.