I'm not saying there aren't shenanigans, but there is not covert market manipulation on a wide scale by guys in suits and cigars in the back room. There is too much they'd have to do and too many people would have to be in on it. I may pontificate on it in a post when I have some time. That doesn't mean there aren't shenanigans. Just that it's not some billionaire cabal controlling everything.
For example, the weekend "trade agreements" becoming public in time for billionaires to get their trades in makes no sense. That's too late. Anyone could get their trades in after the agreements were made including you and I, but it's too late to make money off it anyway on a big scale. You would need to know before hand and get your trades in place before the news. Even getting trades placed over the weekend, they don't take effect until the market opens Monday and by then the advantage is gone. However, if you'd seen the down market and figured it would probably rebound, you could have put in big plays that would have won huge profits from this news. But you'd have had to do it before anyone even knew they were talking. Even Friday before the talks started was probably too late. You'd probably have put in your trades a week or three weeks or a month before.
The one advantage the billionaires have is they have the capital to mess around and the staffs to track and figure out the strategies. What you and I don't have. And for the most part they're not buying or selling stocks. They're buying and/or selling options, which reduce the risk and magnify the potential wins.
For example, with this current turmoil, after the crash a month ago they could have figured it would rebound in the next coupe months and bought a ton of CALL options on likely candidate stocks or ETFs that were likely to benefit from the rebound. It's the rebound those CALL options are worth a ton. And the risk is relatively minor. And they probably hedge it with some strategic PUT options. You and I can do the same thing but we need to have the money to do so, the ability to absorb the risk, and the time and understanding to recognize good points to do it. All of which favors the billionaires and their asset maintenance staffs.
Another type of "safe" option play are credit or debit spreads, where risk is limited. In these you sell a CALL or a PUT and take the premium of selling it as profit. However, to limit risk you buy a CALL or PUT to partner it at a price that is $5 or $10 off from the one you sold ($500 or $1000 in real money since contracts are 100 shares) so if you plan it right you get to keep the premium you sold for minus the lower cost of the one you bought as profit. No need to buy or hold any stock. Normally options have unlimited risk (and reward) potential when bought/sold naked. When you pair them in spreads your limited in loss to that $500 or $1000 spread value minus whatever sales premium you collected. This is how the majority of billionaires and banks and even Warren Buffett make their day to day money. Through trading in options spreads. A lot of little wins adds up and you limited the exposure.
Lastly you can do covered calls (and probably puts). You own a stock or an option and you can sell options against what you own. As long as you sell one that allows you to not lose on the original stock or option you bought this is a guaranteed win. Say you buy stock X at $100 a share. So $10k for one block. Let's say you think it will go up to maybe $125 but not higher. So you sell a CALL on your block you own with a strike price of $125 or $130. You pocket say $700. If by the time of expiration the price never gets to $125 on that stock you've netted $700 in profit and still own your stock. If however it gets up to $130 and your CALL is exercised, you're forced to sell your stock to the guy for $125. But you paid $100 for it so you win $25 a share in profits plus you still have the $700 in the sales premium for the CALL you sold. You can also do this sort of thing merely by by buying a long term CALL and then selling short term calls against it. I have one now where we were doing spreads but there was CRASH in price a year or so ago and the price dove down to below $120 (It had been probably $170 or something when we were doing a spread). SO what we did was buy an 18 month CALL at $120. As there price has gone up that CALL has become very valuable (but because we got into it at a high price on our spread we need that increase in value to get our money back). But we've been selling CALLs against it to raise extra money to get to break even faster and get back to a profit. The only reason the huge value the CALL has that we bought a long time ago is not being cashed out is because we got into it as a recovery methods from a series of spreads that went south so we're already invested in it. If you buy long term calls with your crystal ball and sell covered CALLs against it you can bank a bunch of small incremental profits with no risk. The only risk is that if the price gets above the covered call you sold you will have to cash in the call and are limited in the profit to whatever level it was at.
These are the sort of every day trades these billionaires do and they make a ton of money through lots of small profits. You can do it too. I am not selling any advice or encouraging reckless investments. And certainly not encouraging naked options trading or reckless options trading. You can lose a ton of money fast that way. But covered calls and small spreads are very low risk and if you have the right investment advisor or knowledge you can make it win for you long term. A neighbor of mine makes a ton just doing lots of small covered calls.
Even with spreads you can lose if you're always wrong on the spread. So you need good sources of information etc but it's low risk compared to naked trading.
My point is that these big cigar guys have the capital and the staffs to do this sort of small mundane trading day after day after day and to turn things like market turmoil into big wins. It takes money to make money. But you can employ the same strategies if you dare and they're not getting help that you and I don't get through this process. They're just better set up to take advantage of it.
Anyway, I could say a lot more and I've tried to remove politics from it. Just remember that all the world's countries and all the politicians everywhere would have to be in on the conspiracy if there was a big one with cigar smoking back room guys making deals that you and I have way to also do because they know in advance of deals. Market volatility favors the big guys because they're more likely to have the means to capitalize on it and options, not actual stock, are their preferred weapons.
Chad
www.1880train.com
