Stock Options, and why you should care about them.

∂αякѕтαя said:

Stock bubble burst?

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Something's happening, that's for sure. Not a bubble, but a definite correction. I've never seen such volatility in such a massive market, at least not since 2008.

I got all the way down to -$580 for the day, and at about 1:30pm things turned around and spiked ridiculously fast. Now I'm in the green $60 for the day with four minutes til the markets close. Talk about a damn roller coaster. I'd like to point the blame at one or two of my holdings, but their graphs are all looking the same today.

Sherb said:

Something's happening, that's for sure. Not a bubble, but a definite correction. I've never seen such volatility in such a massive market, at least not since 2008.

I got all the way down to -$580 for the day, and at about 1:30pm things turned around and spiked ridiculously fast. Now I'm in the green $60 for the day with four minutes til the markets close. Talk about a damn roller coaster. I'd like to point the blame at one or two of my holdings, but their graphs are all looking the same today.

Click to expand...

A drop in the market is common after a major salary increase, which the US Jobs report found last week. It's because increased wages equals more spending, which in turn means a higher inflation rate in the years to come. Yuck, inflation, the market hates inflation.

However, it should have recovered by now - this is what I find interesting/worrying. I have my own theory as to why - if you'll indulge me...

Bots and Inexperienced traders. It's been a long while since a wage increase in the US that big. My theory is that last time around there were not so many individual traders, and Bots were only used by large Hedge Funds and the like.

My thinking is that individuals that don't know whats going on are panic selling, which leads to poorly programmed bots to do the same leading to what we are seeing today.

Just a theory though.

Edit for clarification: When I say that it should have recovered by now, I mean that the stocks tend to settle at whatever their net present value would be, they have tumbled past this point. Which is worrying.