The following is the OptionBT sighting of    "Four Amigos".
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Title   :   "Four Amigos"
Position Description (for the Fourth Amigo)  :
     Position taken   :     January 28,2004
     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),
     Margin required,
     Short Puts out of the money by 228 points on Close (Jan 28,2004).
     Expiration/Settlement    :    June 18,2004 / Settlement = 1129.60

Count   :                           3201 pairs plus 5 extra naked short 04 Jun 900 puts

Credit or (Debit)   :            +$1,283,200

Margin   :                          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

Results   :                          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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