Is there any way to reverse engineer options data to find good stocks?

Discussion in 'Data Sets and Feeds' started by 1a2b3cppp, Apr 13, 2011.

  1. Two similarly priced stocks may have totally different option prices, so I'm wondering if this data can somehow be used to discern certain information about stocks that people who don't look at options would not be privvy to.
     
  2. Higher option prices =

    Earnings coming up.
    Important scheduled announcement (FDA)
    Volatile stock (usually some tech stock)
     
  3. You sounded noobish. Similar priced stocks have different P/E, Beta, volume, and etc...

    Options derive their value from stocks, not the other way round.
     
  4. cvds16

    cvds16

    please start to read a few good option books instead of opening one thread after the other asking silly questions about options ...
     
  5. jkgraham

    jkgraham

    Couldn't the options show you weather the market was bullish or bearish on the stock? How could you see that from looking at the stock alone?
     
  6. Any student of pedagogy learns that different people have different learning styles. If someone learns better via dialog over just reading, his style should not be deprecated but encouraged.
     
  7. MTE

    MTE

    The major component in option pricing is volatility. So if two similarly priced stocks have totally different options prices then the most likely culprit is the volatility. However, all this tells you is that one stock is or is expected to be more volatile than the other. It doesn't tell you the reason though. It may be due to a number of reasons, but generally, it may due to the different types of business/industry (e.g. utilities vs tech) and/or an upcoming earnings or some other type of important announcement.

    So it should be evaluated on a case by case basis.
     
  8. cvds16

    cvds16

    as a former options market maker I know it's impossible to learn options truly through dialog; you got to read up on them ...
     
  9. MTE

    MTE

    It would be quite a stretch if you could forecast the weather from stock options! (Sorry mate, couldn't resist it!)

    The correct spelling is "whether" not "weather".
     
  10. cvds16

    cvds16

    the more you know about options the less sure you will be why somebody is really doing something ... it's all about hedging for market makers ...
     
    #10     Apr 13, 2011