Search results

I am attaching a 30-min chart (each bar covers a 30-minute period) for the last 25 days comparing the S&P500 (top) against the VIX (bottom). I don't see a single case where the S&P 500 sold off and the VIX sold off too. Quite dramatically the opposite (except for what is obviously a data...

My background is in futures options, and I'm much more comfortable in that world. It's probably just a matter of what you're used to, but I find many things about stock options that turn me off. Shorting the underlying to hedge your options can be difficult or impossible. On low-cost stocks...

Exactly correct. Then once I get the implied volatility for the ATM options, I have a baseline against which I can compare other options to see if they are relatively "cheap" or "expensive." I'm only interested in whether options are cheap or expensive compared to each other, not compared...

How is VIX up? I have the VIX down 7.75.

My problem with selling the put spread is that you are buying a strike with a high IV and selling a strike with a much lower IV.

A frequent question I get is "What is the correct interest rate to use." The answer is simple - YOUR interest rate. If you're using money you borrowed from a loan shark at 140% annual interest, then use that! If you're using money you'd otherwise put in T-bills at 2%, then 2% is the right...

Right, well said. Occasionally prices may be so out of whack that you can just put this on, but more often it is something you work your way into over time if the opportunity presents itself

Google "option calculator" and you'll find thousands of them, such as http://www.optionseducation.org/quotes/default.jsp Before trading it I would verify on a few such calculators that they agree. But you should really have your own software that you know and feel comfortable with so you can...

Theoretically possible, yes. But 25 points ITM would put the ES at 770. If the ES gets down that far or further in the next 30 days, the probability of a huge IV drop is extremely low. Negligible really.

You're pretty well covered for all scenarios I can think of except one - a giant drop in the ES. The sooner a big drop occurs, the worse for you. If there were a big drop in the next few days and your short Nov. put exploded in volatility and your long Dec. put lagged behind (IV did not go...

Overcoming slippage is always a problem. But why would it be significantly worse than for other multi-legged spreads?

Right, that's what I said - " If you do it in such a ratio that you are vega neutral" - which equals gamma neutral and theta neutral provided all your options have the same expiration date. That means being long more wings than you are short the middle. Naked long straddles are completely...

As a general rule, short the middle and long the wings is a nice position to be in. If you do it in such a ratio that you are vega neutral, you will find that as volatility rises you get longer and longer vegas and you make money. As volatility drops, you get shorter and shorter vegas and you...

Okay, sorry for the lecture LOL. I think every option trader should have analytical software. Or perhaps I should just say that I personally need analytical software to be successful. I'm sure some people can be successful with a seat-of-the-pants approach, but I can't. I rely heavily on...

I don't use the probability cones. As for the 3D modeling - again, I highly recommend it as a learning tool. You can see in black and white how vegas, thetas and gammas change over time, which is very important to understand. When you say "exotic options combinations," do you mean option...

Garch has absolutely nothing to do with my approach to trading and I can't really imagine any use for it. But it does seem like it would be a fun thing to play with one of these days. Would OSET allow for improved timing? Probably not - that one's up to you. But it would let you try out...

Well the basic thing is the Excel option functions, which make it possible to crunch and display option calculations any way you can imagine. Then he has ways to connect to lots of different data sources - including accounts at Ameritrade, IB, etc. - to bring live data into your spreadsheets...

I'll never argue with what works. Lotsa ways to skin a cat.

Maybe a year or so.

The low-cost champion in my opinion is Hoadley. Tons of stuff to play with for about $100.