The following is the OptionBT sighting of
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Position Description (for the Fourth Amigo)  :
Position taken   :
Six Months out,
Vertical Bull Put Spread for Credit,
Long the 04 June 800 Puts (3201 cnt) and Short the 04 Jun 900 Puts (3206 cnt),
Short Puts out of the money by 228 points on Close (Jan 28,2004).
June 18,2004 / Settlement = 1129.60
3201 pairs plus 5 extra naked short 04 Jun 900 puts
Credit or (Debit)   :
For the 3201 pairs at $10,000 each = $32,010,000
For the 5 uncovered short 04Jun900 puts = $134,636
Total Margin = $32,144,636
Net = max potential of +$1,283,200 if all options expire worthless.
break even (if held to settlement) at SPX = 895.48
Comments   :   "Four Amigos"
These "Four Amigos" represent the essence of BigFoot tracking. This level of consistency
is what you hope to find. Each year the group or person responsible for these positions
shows up at the betting window and puts down the bet at about the same time of the year
(always in January). The positions are always the same. Out of the money vertical bull put
spreads ( in 2003 and 2004 ) or vertical bear call spreads (as in 2001 and 2002). in three of
the four years the target month was September, this year it is June.
This means that "FA" is a trend forcaster. So far he has done well as you can see by
adding up the credits from the three previous positions shown above.
"FA" is a big time player. Little guys try to minimize margin costs where as "FA" has
no problem with the large margin requirement ($32 million for this year's position) which
accompanies this type of position.
There must be an enormous amount of research that goes on here. "FA"'s confidence is shown
by the extra five uncovered puts. The fact that this year he pulled back to June for the
target expiration month may be
more a function of the margin tied up than the goal to maintain consistency.
Let's hope that "FA" is an individual because while $1.2M would help my budget for this year
it won't feed a herd of greedy investors.
The main thing is that we want to encourage "FA" to return next year with his
January 2005 prognostication.
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