I'm new to options... I'm wondering if there is any point to chart the actual option prices? Is it just as effective to act off the chart of the underlying instrument? I am assuming that there is some heavy arbing going on and it would be pointless to chart options. Any thoughts?
Your assumption is correct. Chart the underlying, chart the volatility, but it is pointless to chart option prices.
There is at least one reason why one should chart options, at least for a while, to get an appreciation of how the value of an option can disappear and balloon back to life. An other is that different strikes and expirations gain and lose value at different rates which may be visually (by looking at price studies on the option) more comprehensible then studying the greeks. I happen to be a visual person and beside modeling I make visual comparisons when picking options. GC
No. Get a free account at <a href="http://www.Ivolatility.com">www.Ivolatility.com</a>. Then type in the symbol of the underlying and get a volatility chart for the stock. Then directly above that chart you will see links to view Implied Volatility charts on the calls and/or puts for that stock.
Agree. Nice free source. Click an option symbol to get e.g. this chart and hover mouse over the lookback periods under the chart.