I am absolutely lovin it. Don't change a thing. Please let us know just when you will make your trade so we can "get a feel" for how you do it.
Wow!! Does anyone understand what he just said? I love your posts, Nitro, but this one is way over my head. One thing is certain, options expiration will have a huge effect on trading this week. Love him or hate him, Cramer has some interesting comments today on the strike prices many big caps are pegged to.
it's his little joke. it's his little way of saying how UNimpressed he is with it all. ya see.. he's got a little "genius". :-/
tdoc, LOL! I am turning into Jack Hershey/Grob. Lemme refrase, OK? You have to look back years to have had 7+ weeks of lower or equal closings on a weekly chart. Not a single closing higher than the previous week eight weeks in a row now (1/2001 was the last time I believe.) Better? nitro
Putting on a short-term trade just before the Fed announces its rate decision is rather unwise IMHO. Why not wait till the close when you know their decision & comments, and how the market has reacted?
You're not the only one confused... as expiration approaches, gamma does increase, but the increase in volty acts to decrease gamma. Gamma peaks at the atm strikes, rising as volty FALLS and as time passes. I guess he's trying to make some analog to portfolio insurance, but I don't see any causation. The option market is in equilibrium -- the increase in volty lowering gammas, and vice-versa. I will agree that options expiration will tend to lower the stat volty thru the hedging activities of the coversion/reversal arbitrages, but not much of an influence. riskarb
Before anyone jumps down my throat, I am speaking generically when stating "hedging" -- referring to pin risk, unwinding, et al. riskarb