Only Apple

Discussion in 'Stocks' started by short4bread, Apr 3, 2012.

  1. Don't use TA to value options. Vol in that 640 call has dropped 2000bp while the stock has rallied 43 here. It's not indicative of a move, any move.
     
    #261     Apr 27, 2012
  2. Doing a short scalp now, just for fun :)
     
    #262     Apr 27, 2012
  3. I find that options charts form the same patterns as direct instrument charts, so vol and time decay are all accounted for somehow. I don't use regular TA, don't care for the 600 level at the moment for instance.
     
    #263     Apr 27, 2012
  4. The pattern aapl is forming since the spike is what Hershey calls "4 o'clock drift". He isn't as crazy as he sounds.
     
    #264     Apr 27, 2012
  5. Exited my short for a nice little profit.
     
    #265     Apr 27, 2012
  6. Well the chart is a representation of vol, synthetic or natural, but the various curvatures mask it (not normalized). I wouldn't place much emphasis on charting option premium. I would say it's absolutely detrimental.

    If you see the same patterns then stick to the underlying chart.
     
    #266     Apr 27, 2012
  7. Not the same patterns at the same time of course, e.g. if the stock bottoms the option will be in a downtrend, but patterns that adhere to the same laws. This is not surprising, since vol is tradable after all, so subject to the same speculative behavior of traders with its own ecosystem of dumb and smart money.
     
    #267     Apr 27, 2012
  8. The problem is that you're not trading a vol or var swap, there are embedded "convexities" that cannot be seen on a price chart, rendering it counter-productive. An outright VIX futures chart is imperfect to say the least and your charting the options.

    Do what you want.
     
    #268     Apr 27, 2012
  9. So has each his own method; that's the beauty of it. I don't know any more about options theory than Black-Scholes and the Greeks, used in an intuitive way.
     
    #269     Apr 27, 2012
  10. My last on this, but the roulette bettor thinks they also have the edge.
     
    #270     Apr 27, 2012