Woohoo! Oh ho boy I’m rich! I’m wealthy! I’m independent! I’m socially secure! I’m rich! I’m rich!
finance.yahoo.com/q/bc?s=FRE
Time to buy puts on FRE? I think it’s peaking again.
Yahoo says August $70 puts are at $3.40 per, which is a .65 premium:
finance.yahoo.com/q/op?s=FRE&m=2004-08
But you can go out to October for only $1.20 more:
finance.yahoo.com/q/op?s=FRE&m=2004-10
The U.S. job market and economy are moderating their pace; housing in particular seems to be stalling in price growth, and is expected to for several years:
story.news.yahoo.com/news?tmpl=s … use_prices
[quote=“AP Business article, excepted”]WASHINGTON - U.S. house prices are likely to grow at the slowest pace in more than three decades as interest rates climb and land prices take a tumble over the next three years, researchers at the Federal Reserve have estimated in a new study.
“Of primary concern to some analysts is whether the recent run-up in aggregate home prices will be somewhat reversed, much like the 1985-90 and 1990-1995 experience,” when inflation-adjusted house prices declined in several major metropolitan areas, write the authors of the Fed study, Morris Davis and Jonathan Heathcote. Davis is a Fed economist; Heathcote is an assistant professor of economics at Georgetown University.
They conclude a reversal of those magnitudes
Like I was saying . . .
story.news.yahoo.com/news?tmpl=s … economy_dc
Housing Starts Tumble Unexpectedly
By Mark Felsenthal
WASHINGTON (Reuters) - U.S. housing starts plunged unexpectedly in June to their lowest level in more than a year as rising interest rates slowed the hot housing market, a government report showed on Tuesday.
Homebuilders broke ground at a seasonally adjusted annual rate of 1.802 million units last month, down 8.5 percent from an upwardly revised 1.970 million the previous month. It was the biggest drop since a 10.7 percent tumble in February 2003.
While the housing market decline has to some extent been expected as interest rates climb with the strengthening U.S. economy, some analysts saw the June data as a harbinger of the end of a multi-year boom.
“This is, I think, the long-awaited start of the slowdown in the housing market,” said Drew Matus, an economist at Lehman Brothers. “It does seem a little overdone. This kind of sharp drop-off is not likely to be a simple reaction to higher interest rates, but rather a little bit of an over-reaction.”
Single-family starts fell 9.5 percent to 1.489 million units from 1.645 million the month before, the lowest level since May 2003 and the biggest drop since February of last year.
Mortgage interest rates fell to near historic lows at the beginning of 2004, fueling strong demand for homes. But with the U.S. economic recovery gaining strength, interest rates crept higher last month, making homes more expensive and dulling appetite among buyers.
Just wondering 
The price of FRE stock is now $67. How much would you reckon it is worth in August?
When you wrote the first post it was $70. So it has drop by about 4% since 17th of Jul. Today the 20th. 3 days.
OK Greenspan is in session tonight. Tomorrow maybe better etc.
Minimum Option contract is for 100 shares. So OCt @$70= $4.50
So $450 per lot excluding brokerages.
Am I right?
I just want to understand. 
Actually, FRE never hit $70. Its peak was (IIRC) 67.44 on Monday afternoon.
I have no idea what the future holds. I only know what I want to bet. It could shoot up to $80, rendering any $70 puts worthless. It could drop to the high 50’s, providing pretty sweet gains. Timeframe is critical, since options are only good for a fixed period, and you can’t just be right, you have to be right in the right timeframe.
I’m betting on a dip, but I’m sometimes wrong.
You’re correct on the options costs. Options are sold in “contracts” of 100 options each, and the price is per option, so if the option price is $4.50, you’ll actually pay $450.00 per contract, plus commissions. Three contracts would be $1350 plus commish. On options, commissions usually are a base plus a small amount per contract, not just a flat fee (like on stocks).
Of course, you’ll also have to have signed an options trading agreement with your brokerage before you can trade them – or a shorting agreement (usually including a margin agreement, IME) if you want to short. Brokerages usually have income and net-worth requirements for allowing such trading.
Bloody hell, that pisses me off. It just needed to hold up one more day. Piss on that, just three more hours. 
[quote] MapoSquid: Actually, FRE never hit $70. Its peak was (IIRC) 67.44 on Monday afternoon.
[/quote]
You’re absolutely right. I made a mistake. The descent was no where near as steep. More like $67.44 - $ 65.42 = 2.02 approx 2.99%
Your @$70 Aug Put has been doing well. $3.40 (purchase price) versus current price of $4.60 (4.60-3.40 =1.2)/3.4*100% = 35.2% increase.
Not bad for 3 days work! 
If this continues we should seriously consider Sep and Oct. 
No, I didn’t get in until last night. I don’t have an internet connection at home, and I don’t trust internet cafe computers – so if I access my accounts, I bring my own machine in.
I paid $5 per contract, and it looks like it finished down from there, so I probably covered the spread. The latest headline (article requires subscription) from the WSJ on FRE is “Fannie Mae’s Net Rises, Forecast For Year Is Cut as Growth Slows” so I think it will drop some more. Also, Greenspan said that the rate hikes may accelerate, which should drive down stock prices in general.
However, while my puts will protect my shares, I didn’t buy a large herd of extra contracts, just three to help cover costs – so basically I’ll break even overall. If I’d gotten in on Monday, I would’ve bought more. 
Timing is EVERYTHING with options.