Buying Index Options Straddles: October Will Be Volatile

Today is quarter end.   So many things are happenning. 

1. Fund managers are getting new money.
2. I'm guessing some funds of hedge funds are getting notifications of liquidations (on the back of the Ameranth losses).
3. Dow is near new highs
4. Long Term Interest Rates just dropped huge. (ouch - I'm short bonds - whose prices went up)
5. Oil has dropped
6. Commodities have dropped
7. The market has forgotten completely about China and emerging markets

I think the 4th quarter which starts Monday will bring all sorts of portfolio reshuffling and volatility.  Because the market has been going up, I'd prefer to bet on a reversal (market decline).  However, interest rates and inflows confuse the issue.  So, instead I'm betting both ways.  Today I bought (straddles): puts (bet on a decline) and calls (bet on an increase) on both the S&P500 and the Nasdaq100.

On the Nasdaq 100 NDX (recent price 1663.00):
Paid 40.00 for November 1675 Calls (NDVKD)
Paid 41.40 for November 1675 Puts (NDVWD)
Total = $81.40

On the S&P500 I used options on futures (futures quote 1347.50):
Paid $27.50 for December 1350 Calls
Paid $27.50 for December 1345 Puts
Total: $55.00

My plan is to liquidate these potions at some point in October.  I will do it in the middle of some kind of panic.  If there isn't a panic then I plan to liquidate them by the end of the month.

Disclosure:  I own the positions mentioned above.  I plan to update all changes.

Disclaimer: Nothing in this web log is meant to be a recommendation to buy or sell.  I do not give investment advice.  Do your own research.  Do not rely on anything in this weblog to make investment decisions.  I do not log all my trades here. I only describe or mention those that I think might be interesting. Consult your own investment professional before buying or selling any security.