Do Option Sellers Have a Trading Edge?

Discussion in 'Options' started by xelite777, May 9, 2014.

  1. You should strongly consider your suggestion.
     
    #61     May 10, 2014
  2. Drownpruf, your aggressive attitude towards board members is absolutely amazing, relax or you are going to have a heart attack one day.
     
    #62     May 10, 2014
  3. 110/65 and I row 10K daily on the Concept2, but thanks for your concern.
     
    #63     May 10, 2014
  4. FXforex

    FXforex


    Trading "mispriced" options is not an edge. An "over valued" option can rise in value and an "under valued" option can fall in value.

    :)
     
    #64     May 10, 2014
  5. FXforex

    FXforex


    I do believe that Drownpruf's aggressive attitude is "roid rage". :(
     
    #65     May 10, 2014
  6. Sure, but apparently some traders swear that it is possible to profit from mispriced options, here is one of them:

    http://www.moneyshow.com/articles.asp?aid=OptionsIdea-19436

    From the article:
    "This likely sounds crazy in the day and age of computers, but up until about 2003, floor traders spent a majority of their floor time looking up at the option screens and converting calls into puts and vice versa. If the trader found a call or a put that was mispriced, the trader would then trade that option. The idea was the trader was trying to lock in "edge." "Edge" is a term professional traders use for the value the trader enters an option trade above or below its theoretical value. "
     
    #66     May 10, 2014
  7. Do you trade the skew like you trade the Forex?
     
    #67     May 10, 2014
  8. I do trade options, among other things, yes...
    Why don't you explore and try to exploit some of these put-call parity "mispricings"? It's the only way you'll be able to know for sure what's going on out there in this inefficient options mkt...
     
    #68     May 11, 2014
  9. Of course if you're a good disciplined trader you can trade options and for example as Price Headley once suggested when selling strangles if premium trebles on one side,close out and have a rethink. Even a fund manager could cope with this, and yet they fail every year relying on the retail trader being scared about 'complex' products.
    It all comes down to discipline-and despite knowing when and what to do, I have on several occasions failed to act correctly. I'm still here though
     
    #69     May 11, 2014
  10. sle

    sle

    Fight night! Can I have some pop-corn, please?!
     
    #70     May 12, 2014