To Taper or Not To Taper – That Is The Question…


The Fed meet today and tomorrow to determine whether or not they will begin “tapering”, a euphemism for ending the $85 billion of money printing they have been doing every month in a desperate attempt to revive the sluggish US economy. Most economists believe inflation figures are too low for the Fed to begin tapering this month, but a full 38% of those polled do see an immediate tapering.

I believe there will be a postponement – consider it a Christmas gift to the stock and bond markets – but I’m not confident enough to bet on it! However, I’m more certain about uncertainty, if you’ll pardon the cheap pun. I foresee a continued increase in uncertainty or volatility, peaking tomorrow afternoon at the time of the Fed statement.

This presents the following opportunity, which is delta neutral – in other words it doesn’t care in which direction stocks move – to make money. It will only lose money if uncertainty stays stagnant or drops between now and tomorrow
and if the price of the index remains stable, moving only in a tight range.

The Opportunity

  • Probability : greater than 70%
  • Risk : Reward : around 1 to 7
  • Duration: 2 day trade
  • Minimum Investment: $37
  • Maximum Investment: none


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