Investing? Sell Puts on the Best Closer in the American League

by user Ron Sen, MD

Just as fans have a fascination for fantasy sports, so too do they salivate over another of America's pastimes, investing. And if you want the biggest bang for your buck, you trade options, a.k.a. derivatives because their prices derive from the value of the underlying. A call option gives you the right to buy a certain vehicle at a certain price on a certain date. A put option gives you the right, but not the obligation to sell a certain vehicle at a certain price by a certain date. For example, when you buy a life insurance policy, you buy a put option, on your life, betting against your existence at some future time. Conversely, the insurance company takes the other side of the trade.

In a sense, professional franchises buy call options on players when they draft them, hoping that they increase in value, before their time premium expires.

So, you can bet on a player (investment vehicle), buying the player, buying call options (or futures, another type of derivative), or selling puts on the player. All of which brings us to the analysis of the American League's best closers.

In third place, but outstanding comes K-Rod, Francisco Rodriguez, with 24 saves, a 2.27 ERA, 1.4 strikeouts per inning, opponents OPS of .589. In second place, our local candidate, Jonathan Papelbon, who has 19 saves, 1.77 ERA, 1.4 strikeouts per innings, opponents OPS of .488. Leading the pack, from points elsewhere, J.J. Putz, 0.92 ERA, with 23 saves, 1.1 strikeouts per inning, and opponents OPS a lowly .398.

Amazingly enough, the next lowest opponents OPS in the AL belongs to Hideki Okajima at .403.

Putz toils in obscurity for the Seattle Mariners, who despite surprising success and second place in the AL West, had the sudden resignation of skipper Mike Hargrove this week. Seattle remains only 1 1/2 games out in the Wild Card chase behind the Detroit Tigers, 3 1/2 games ahead of the Oakland Athletics and 4 games up on the Minnesota Twins.

Putz's OPS translates into a microscopic WHIP ratio of 0.59, opponents batting average against is .127, and in his last ten appearances spanning 11 2/3 innings, he has surrendered 4 hits, three walks, no runs, and had 16 strikeouts.

So, if you want to invest in an American League closer, sell puts on J.J. Putz (pronounced pootz).