GalaTime

Readings: S&P option spreads, Investing abroad, Midcap fundamentals, Morgan Stanley WM

Bloomberg: U.S. Stock Market Stumble Presaged by S&P 500 Options

Investors are paying the most ever to protect against a drop in the Standard & Poor’s 500 Index, data compiled by Morgan Stanley show. The gap between the price of so-called put options on the benchmark for U.S. equity and the cost to wager on further gains has averaged about 8 percentage points since August. That’s more than the previous high in July 2001, before the index dropped 34 percent and fell to the lowest this decade.

The implied volatility on puts is 8.1 percentage points higher than for call options, enabling investors to profit if the index rises at least 10 percent in the same period. The so-called implied volatility skew climbed as high as 8.53 points since mid- August. That’s steeper than 99 percent of all readings since the start of the decade.

Hmm .. how about another quick up-swing in the indices?

DNA: US stocks a click away

ICICI direct.com has tied up with Penson Financial Services Inc, a US-based broker-dealer firm, to launch its overseas trading service that will allow individual resident customers (the service is not available for corporates, partnership firms, HUFs, trusts, and NRIs), to buy and sell equities, ETFs and transact in stock and index options across all US stock exchanges.

Every time you make a trade, you will be set back by 75 bps of the trade value or $9, whichever is higher.

Finally!

Mint: Fundamentals are shifting gears

The P-E multiple of the Nifty Junior has expanded by 148% to 21.5 times in the four-and-a-half-year rally. The Nifty’s P-E multiple has risen by a much lower 87% to 23.6 times now from 12.6 times in April 2003, although its earnings, too, grew at an average rate of 28%.

Financial Express: Morgan Stanley to start India wealth biz

India had 100,000 millionaires in 2006, up 21 percent from a year earlier, according to a Merril Lynch/Capgemini report. Morgan Stanley’s focus in India would be mainly on the rupee-based business targeting wealthy clients who have $5 million in assets or 40 percent of India’s 100,000 millionaires.