Backing Away

Discussion in 'Options' started by the_dude, Mar 20, 2002.

  1. nkhoi

    nkhoi

    #51     Apr 8, 2002
  2. #52     Apr 8, 2002
  3. nkhoi

    nkhoi

    you can also type in url deja.com and search for "demark option indicator"
     
    #53     Apr 8, 2002
  4. Clicked on it, pasted it and typed it. I will try the search.
     
    #54     Apr 8, 2002
  5. nitro

    nitro

    Got it. Any literature you would recommend along these lines? I looked at Taleb's book - seems very good for ideas? Charles Cottles book?

    BTW, I "registered" for Charle's Cottles tuesday seminars on Lincoln avenue. Have you been? If so, what do you think of it?

    nitro
     
    #55     Apr 8, 2002
  6. You probably going to have to use a pricing model as a very rough guide (use the binomial instead of the Black Scholes model). Then you are going to have to look at the underlying asset. Look for any news that could move the asset in the future. Look at the implied volatilities to see what the market is telling you. Figure out if you agree with what the market is telling you or disagree.

    Look at the implied skews.

    Use your model as a guide only (i.e., just because your model tells you that an option is worth 1.00 and you see a lot of volume trading at 2.00 doesn't make the option a sell... maybe there is something going on that isn't reflected).

    Unfortunatley, there really isn't a "black box" which tells you what to do.
     
    #56     Apr 8, 2002
  7. The problem is in the IV, don't use the standard solutions, work out your own. Which model you use, is not critical.

    No, I haven't been there.
     
    #57     Apr 8, 2002
  8. nitro

    nitro

    OK Sansei.

    Thx.

    nitro
     
    #58     Apr 8, 2002
  9. white17

    white17

    I can believe that it might work a good deal of the time, particularly close to expiration. I'll never be convinced that there is no communication ( read collusion) between equity MM and derivitive MM in the same dealer house.

    I find it humorous to watch various factions trying to move a stock to the next strike or one cent below it just prior to the close on expiration friday.
     
    #59     Apr 17, 2002