A Line in the Beach Volleyball Sand? (SINA)
by Houghton and Atkeson 12/02/08
In the wake of the Chinese Olympics, option investors have drawn a line in the sand with regard to further declines in Sina Corp. (SINA), a large Internet company in the People's Republic of China.
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We are seeing three times normal volume as more than 10,000 of the SINA Dec 25 Puts (NOQXE) were sold today.
With the stock trading at just above $25, these options investors are at risk of losing money if the stock falls below the $25 strike price by Dec. 19, expiration day.
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Looking into June, the market should begin refocusing on upcoming earnings reports for evidence the economy is gaining momentum.
Watching the Treasury's Actions
In the short-term, the government's bond auction is likely to be a key driver of stocks.
Treasury Auction Boosts Market
The Treasury's auction of two-year notes brought an upside surprise which should alleviate fears of a lack of demand for U.S. paper.
Credit Markets Point to Upturn
The credit market, a reliable indicator of equity direction, suggests we will break out of the SPX's trading range to the upside.
The market seems to be saying that a 30% move up from the lows is ahead of the real economy and the market needs to allow the economy to catch up.
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