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I was wondering if anyone wanted to comment on the recent inquiry into the recommendations of a Holly Becker of Lehman Brothers on Amzn back in 2000. According to the Times, she's married to a SAC retail trader who might have had prior access to her downgrades. Apparently the SEC is looking into...

Guys, Thanks for all your thoughts and comments. This has been a really good thread and I've picked up a few helpful insights along the way. If anyone wants to talk about option strategies l'd be glad to contribute more.

Trajan: Man, it really takes cojones of steel to be a market maker. although lots of people like bashing the specialist for all their problems, I feel that those who step up to the floor really show amazing courage and determination. You're right, we didn't discuss much supply and demand...

Found this on Mcmillan's site. He gives us the lowdown on specialist thinking and trading- Question: Let's take an example from one of your recommendations. Suppose you are the type of trader who has the psychological and financial ability to sell the naked S&P May 1125 puts. SOMEONE has to...

interesting input guys. After thinking about this for a while, I've come to the conclusion that even if the specialists understand the flaws of the pricing model, well... they also have to deal with it just like we do, and they're certainly not immune to inefficiencies. It's my hunch that...

I agree . The mmaker most probably doesn't care about taking the other side of a trade like that because he is hedged within seconds. I wonder if there are any mmakers on these forums who could confirm that... doubt it, they're probably making too much money to bother :) option trading...

A covered put in anticipation of a breakdown sounds fine to me. Like i mentioned earlier, the example I chose, the brl trade, wasn't posted as the 'best' trade to do under those cirmcumstances, but rather just as something to get the discussion going on Bender's thoughts. If your...

No matter how many times we take hits in the markets, we always reserve ourselves the right to better judgement in the future and if you're perservering in your trading and analysis while learning from the past, you are on the right track. From what I've read in market wizards, many of those...

Re the math: I de-annualized the implied vol figure to match the time frame I was looking at. Vol figures, whether statistical or implied are generally quoted as annualized and you have to rescale them for the appropriate period under consideration. In the BS model (as fate would have it, the...

AAA: Yup, interesting point. And as you say, why not trade cash for directional bets. I would say yes and no. I would trade the underlying for long stock trades. In fact, I trade breakouts that way. I happen to believe that buying calls or call spreads are inferior strategies when compared...

Nice input. I'll try to answer your points: 1) Wide bid-ask. Sure, that's a problem that cannot be overlooked. However, I look at it from a risk-reward standpoint, if the setup is excellent and i'm looking to make 1.00 or more off the short leg of the spread then it might be worth taking the...

AAA, You raise a good question that I wrestle with constantly in my analysis. Market makers are in general, on top of things when it comes to accomodating and anticipating big moves in their stocks-you can see how they jack up the vols weeks prior to events like a merger announcement etc. If...

Redzuk: Thanks for your tip and link. I read the thread and found it quite interesting. Much could be said about Niederhoffer's and Taleb's diametrically opposite styles but overall, I agree with the guy who said that trying to pit short vol vs long vol trading is an exercise in futility-...

Well... so much for a first post...

I was wondering if anyone out there is interesting in discussing some of John Bender's comments on option pricing from Schwager's 'Stock Market Wizards' interview. I found Bender's thoughts really refreshing in a world where people often repeat the mantra of buy low and sell high volatility...