Friday, October 29, 2010

How are you playing QE2?

Let me tell you I am so tired of talking about QE2 and am glad that it will finally be out and in the open once the fed conludes their two day meeting next week. We have seen estimates of 500 billion to 2 Trillion. Then you have GS saying that anything under $4 Trillion will be ineffective.

But since then the number has been tempered a bit to a few hundred billion dollars over several months. I think that the markets have been pricing in a much bigger package and we might get a sizable corrective move after the details are released. But you also have to look at the flip side, the market may take it as the economy is not doing as bad as everyone thought, therefore the fed does not need to print that much more money.

But I will tell you, aside from teh trades that I have on that are non directional plays, I am playing this with a bias to the short side. I have the following positions to the shortside going into next week.

1) Long 5 RBOB Dec '10 2.04/1.90 Put spreads @ $0.0525

2) Short 5 CL Dec '10 80/82.50 call spreads @ $0.85

3) Long 5 CL Jan '11 83/78 put spreads @ $1.84

This is where I stand going into next week.

How are you playing next week?

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