It's much better to buy slightly OTM options than ATM ones?

Live Vol- they bought those to short that to nothing...

 

Well now that you changed the story it’s a different case in that particular instance. You omitted some pertinent information in your original story which you just added. Did you post your coat tail trade on in somewhat real time here on ET?


I said it before and I’ll say it again…. For regular retail investors reading these forums… Buying calls or puts just because you have heard of or saw a big print on the tape in a series is a very very poor strategy.

 

Stefan is a founder. I am Ophir. Yes, Stefan is a very well regarded pro trader on the floor. I have the fortune of trading directly next to him.

 

Off-topic, but Ophir is a fantastically cool name. Biblical, yet not obvious. Kudos!

 

Hey, anything is possible. Today someone bid .10 for 5562 combos (buy call/sell put) with stock offered @ 2.58 stock. Didn't trade, stock rose to 2.69.

Nickel options on offer, 600k long stock order through synthetic. Doesn't look like selling stock vs. calls to me. Looks like getting long and then some. But it's just conjecture. Could be the opposite.; or just people taking different sides.

 

lol. Thanks man. I do appreciate it.

 

Details in blog brother; didn't want to bore people - you forced it out of me

I did not buy those for a nickel - but I wish I did.

 

No sweat

 

I agree with this. I would even add that a wider spread is an even better characteristic. I usually use bear put spreads and bull call spreads as (insurance) hedges. I actually like my spreads to be further OTM and wider than "usual." The returns are extremely high if they end up ITM--which is great.

 

This is a silly statement for a whole variety of reasons...

So what if you can buy more options? If I have a 100 bucks, I can own a lot more pennies than quarters. The value of my 100 bucks doesn't change.

You don't get the right to call Black and Scholes morons until you invent an independent and more robust option pricing theory and receive a Nobel Prize for it. Moreover, they didn't blow up LTCM. Finally, Black Scholes is perfectly capable of pricing OTM options. If you don't know how to utilize and refine the theory properly, that's your own problem.

What you say regarding the normal distribution is complete nonsense. The problem is emphatically NOT that "large movements from the average are extremely likely".

And, finally, slightly OTM options are as much "the thing" as any other options. Generalization of this sort are utterly meaningless.