Consider this scenario: Say the S&P 500 closed at 3400 today (Sep-9) and you knew (100%) for a fact that by the end of trading day tomorrow (Sep-10) 4pm it will close at 3200.
So now, given this fact, what do you think would be the action to make the absolute most amount of money using all your capital at hand? Would it be (use ALL your capital on below choices):
- Buying 3200 PUT options expiring on Sep-11 (Weekly ending) [closest expiry]
- Buying 3150 PUT options expiring on Sep-11 (since it still has 1 day to go for time-value and due to the massive crash, it may get bit up high)
- Or would you go far out of the money getting say 3000 PUTS with further expiry of Sep-30?
- Or a 3400 PUT expiring on Sep 11, so you get a full 200 point intrinsic value
- Buying Sep-18 Short Futures e-mini Contract.
- Buying Dec-18 Short Futures e-mini Contract.
In a nutshell, if all things being equal inch for inch and pound for pound, would Futures contracts make most money or extreme out of the money PUT options which are about to expire but suddenly go in the money. I would assume Options do. What do you think?
P.S. OR relating to my other question, credit default swaps? But I think those are for longer term crashes and require debts to be defaulted and hence not suitable for this scenario?