The bullish trade offered today in Netflix is intended as an offset against put options we’ve been accumulating in the Diamonds. The bearish play is based on my gut feeling that the huge new tax on the middle class represented by Obamacare is about to deliver a knockout punch to an economy that never quite managed to shake off The Great Recession. If that weren’t bad enough, corporate earnings are falling even as evidence mounts that the second stage of the housing collapse is under way. But you never can tell. Quantitative Easing has stacked the deck so heavily in favor of the IPO-mongers and Wall Street thieves who control the game that Netflix and some other high-fliers could conceivably double in price with the country languishing in Depression. Our strategy is to straddle these possible outcomes, using the leverage of options to reduce risk in what is essentially an over/under bet down to bupkus.
