Not everyone on Wall Street is convinced that the worst is over.
In fact, some investors are betting tens of millions of dollars that the market is headed for a selloff--a major selloff.
The reason: worries about a worsening credit crunch, along with speculation that the Federal Reserve may defy expectations and hold off on cutting interest rates at its Sept. 18 meeting.
So far, over $500 million in in so-called put options have been purchased betting that the benchmark Standard and Poor's 500 index S&P 500 INDEX.SPX will tumble anywhere from 5% to 11% in September. Some investors are even buying put options calling for 52% decline. A "put" option increases in value as the underlying stock or index falls.
To put it in perspective, a 5% drop in the Dow Jones Industrial Average would be the equivalent of 667 points. An 11% decline would equal 1,468 points. And a 52% drop? You don't even want to know.
The upshot is that some major investors are putting up big money that the market is facing a major decline.
(entire article @ link)
http://www.cnbc.com/id/20461003