For Historical reference - the OEX or SP 100 Equivalent during the 1987 Reversal:
Baseline VXO (Correlated Historical) Spiked to 30 from 18.22.
At the time I was working at Drexel and will never forget how Investors began selling OEX Puts at the Money/Above - believing the one-day event was a knockoff.
This was Friday., end of week anomaly. Screw Germany was the thinking. The Ripples will be contained. Greenspan provided the Emergency pat down to Member Banks the following week, reminding them - this event must be contained for everyone's Financial health.
The S&P 500 lost 10% the week ending Friday, October 16, 1987 and lost an additional 20% the following Monday, October 19, 1987.
Nervousness appeared the following Monday AM briefing @ 5 AM. John Jetter asked the team to contact clients and reduce exposure to OEX to reduce Risk.
Monday did not end well for those who did not heed his strategy.
The VXO on Equivalent - Spikesd again to 170+ Monday, setting near 150 on the Day.
This was THE largest single Daily move in Market Volatility in History.
The One Day wonder turned into the largest Bloodbath in History for Bulls and sellers of OEX Puts, Dip Buyers, and the Pop and Fresh Peter Lynch Herd.
They were decimated, the Magellan Fund took its largest 2 Day loss ever. Small Caos were raked - defeating the individual investors had inherent advantages over large institutions Thesis.
Theories do jump out of High rises in a Lifetime of Investing.
Leverage was not an issue then as it is now.
It sets a preamble for enormous declines, the Potential for them.
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