There was an interesting analogy from a press interview when a deal broke down in 2014. Though at these IVs, I am going to need a big move. I bought dearly and expect volatility contraction from a consummated deal. But Putin may decide to hand me some tuition money, yet. Wednesday morning prior to Thanksgiving, CL made a 2% move down and recovered. Runner's stretch...
I have CL opt plays, however none of them involve trying to land IV moves. A tad to difficult for me. Infact I wish there wasn't any IV at all .
yeah, buying gamma is pricey. I did have a directional play which was short OTM put spreads. The 2% dip shook me up some. I am not sure what Putin is playing with the insistent "freeze" talk. It requires others to make deeper cuts. It's a potential deal breaker. So, I'm going long vol instead.
Quite a bit of drama. This trade is making me bipolar. The post Thanksgiving move in CL was -4%. Suddenly, I don't feel bad buying those puts at a high. An update: Saudi/Russia not coming to an agreement http://www.bloomberg.com/news/artic...ll-out-of-russia-talks-as-opec-deal-no-closer Iran is optimistic http://www.reuters.com/article/us-iran-algeria-opec-idUSKBN13L0G8 Additionally, I came across an old options insider interview with Blu Putnam and a guy from Akuna. The Akuna guy didn't believe that we would see an 80 vol level ever again. : (
A $1.50 move during RTH is a hail mary run . Thats right on the edge of maximum movement for CL. Would have been quite a nice trade.
Still happening. Repeated runs to $46. They are running the stops like forex. At least equity markets seem to like lower oil.
I am happy IV didn't implode, but I was expecting a move to $51. Still, making money is better than losing it. I may just cash it early because the skew has already flipped. I don't know how MMs do it and still keep quoting during the day. Incredible.
There are a lot of things I don't understand about the markets. That is one of them . If there is a serious on the spot volatility spike then they will remove their quotes.
It is simple. The high side is being bought up due to demand(left = high put skew). People were thinking oil was going down(right = high call skew). Whether it is a put or call doesn't really matter. It's just the terminology. So, now they think it is going up. I am hoping you can see the x-axis of the graph and see the strike prices. There are safeguards for buying/selling too much delta for one direction. Too many hits on one option contract might send off alerts. Generally, MMs just expand the b/a spread and can quickly turnover the inventory for a profit if someone was crazy enough to hit the bid or lift the ask.