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Options Action in emerging market currencies

Benchmark borrowing costs of 10.75 percent in Brazil, 6 percent in South Africa and 6.5 percent in Indonesia" (bloomberg) are causing investors to flee the dollar in search of higher yields. Thus, the lack of PUT buying on these currencies may indicate that emerging country currencies have some room to move to the upside. With investors selling their dollars to buy other currencies, it actually may mean that investors are willing to take on risk, a positive for the stock market. Although it is counter-intuitive that money flowing out of the US is a good thing, it is beneficial to many companies with international exposure and exposure to commodities. Thus, the combination of physchological risk taking appetite and the fact that the S&P is made up of companies with such exposure mentioned may actually push the S&P 500 back to the 1200 level.

Sell UUP calls to be willing to be short the dollar at higher levels. (Feel free to revisit my buy UUP Oct 24 puts for .60. I only doubled your money in 2 weeks as they trade $1.20 now!)


Time to Sell: Currencies?


After a huge run up of the market since the end of August, Brian recommends to use call spread to replace existing stocks for further upside. Specifically, Brian suggests buy QQQQ Nov 48/52 call spread for $2. He still likes individual tech stocks like AAPL,GOOG and AMZN.


Protecting Gains Into Q4

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