Condor Options

The Dow was screaming towards 14,200 today, and several of our members were screaming in pain about the tension in our trades. At the end of the day, the Dow closed down 63 points, the cubes (QQQQ) are off 1.59%, and we’re in a great position for Friday and the weekend. Do you want to know why the markets reversed today? Here’s the only theory (so far) that makes any sense:

1. JPMorgan revised its revenue estimate downward for the coming quarter for Baidu.com (BIDU). The selling kicked in at around 1:15PM. Baidu is a big name for speculative traders, and has become so popular that it seems to have acquired bellweather status a la AAPL, GOOG, RIMM, etc. Adam theorizes that a CNBC observation about the relative magnitude of BIDU’s fall sparked the heavy selling.
2. By 1:50PM, fear spread to the rest of tech, and QQQQ didn’t stop falling until it hit $52.63, which is about where it closed.
3. Tech has been a big market leader for awhile now, a fact we’ve experienced with some firsthand frustration every time we try to throw on a QQQQ condor. Without tech leadership, the rest of the indexes tumbled as well.

Not saying this is the actual cause of today’s reversal, just one that might make some sense. Just because AP, Reuters, Bloomberg et al. are also treating this as the likely scenario doesn’t mean it’s not true, lol. In related news, the VIX closed today at 18.88, up 13.26%. Happy days, we’re ready to look for November trades now.

[tags]BIDU, GOOG, AAPL, RIMM, QQQQ, DIA, VIX, CNBC, volatility, technology, markets[/tags]