Search results

My feeling is that right now the dumb money is being sucked in during the final frenzy while the pros are quietly pulling money out of the housing market, much like the first half of 2000 in the equity market.

The CPI and PPI have not shown much inflation during the current Fed tightening cycle. The US labor market is showing some pressure recently. But given the “global labor arbitrage” (using economists' term), the labor cost is not likely out of control. It seems to me the Fed is looking at the...

Why do you think the buyer of the 3 105 calls want to buy the underlying at $105 from you when the market is at $95?

That's a good point. Thanks.

Now I think about it, the call does have a higher margin requirement potentially, i.e. the 10% rule. For the put it's premium + 10% * strike, but for call it's premium + 10% * underlying. And this is consistent with MTE's comments that underlying has higher upward movement than downward movement.

Higher delta, that makes sense. I forgot that. Thanks.

Thanks to both of you guys. The volatility smile in which the IV of puts differs from IV of calls exists only when the put and call have different strikes and/or expiration days. In my original example where the underlying and put/call strike are both $100, the implied volatility of the put...

Say the stock is $100 and we are selling ATM puts and calls (European options). The call premium will be worth more than put premium by the amount equal to interest earned on strike price $100 prior to expiration at risk-free rate (put/call parity). This is based on pure arbitrage argument, no...

1. A lousy ideal that will destroy us. 2. A great ideal that will make us all rich. 3. I don't know. 4. I don't care. I'd add fifth: the job outsourcing is a great opportunity and challenge that make some us who can take the opportunity richer and some of us who cann't meet the...

I bought shares of FDG (coal) six month ago, the price is up 30% so far, on top of 6.5% dividend yield.

Back to the original question, what asset classes are you guys put your money in? I am about 60% cash, 30% stock and 10% bond. I'll probably buy a second home within next five years.

I think that's the only way to be a seller, if you want to stay in the business long. But that means your ROE is about 10% - 15% annually from what I see. Selling option naked is a big money game. If your capital is limited and you set profit target 20% or more, sooner or later you'll blow up.

I have an IRA account with I.B. It allows you trade futures. Margin in futures' trading has a different meaning from the one in equity trading. In equity, it means your broker lends you money. Obviously this is not allowed in an IRA account. In futures trading, margin means good faith money...

I really meant A/C/E (Alliance/CBOT/Eurex) , not Eurex, where the Treasury option volume was next to nothing.

The electronic market for options on the US bond market has been around since Aug.2000. But the volumn is next to nothing. Eurex is never big on options. Since CBOT moved to LIFFE, the 10-year option is still small, only about 5000 contracts a day, compare to 250,000 in the pit. I'd keep the...

Andy Xie writes about China. Check in (update daily during weekdays) http://www.morganstanley.com/GEFdata/digests/latest-digest.html

I don't necessary agree Buffett said in his article. But to say he does not know the international-exchange accounts consist of current-account and capital-account, as implied by Prof. Boudreaux's letter, is ignorant. Some of Prof. Boudreau's students might not know this, but suggests that...

Now I think about it, I kind know why this is a bit confusing. In the two account strategy, the put and call risk are hedged and the risk appears in the QQQ positions. That's exactly the case. When you trade options, you have to consider the Greeks of ALL your positions. The long QQQ has...

I didn't explain in enough detail in my previous post. Let me try again. Here is the risk: For the covered call writing, the upside risk is hedged. But don't forget the downside risk. If the QQQ down, you get keep the call premium but will have loss in QQQ. The same with the short put and...

You are essentially shorting a 34-put / 36-call strangle naked. As Eldredge pointed out, your long/ short position of the underlying canceled out each other. I don't know any other strategy can be more risky than short strangles without any hedge, especially the volatilities are so low now. I...