AAPL raped by hft market makers today thwarting option holders

[sle]

What is not a difficult concept is the fact that someone has to take the other side of the position for you to hedge. Who?

MM hedge delta using stock (in most cases). So, if an MM sells a call, he will instantly buy stock to cover delta. Initial hedging has nothign to do with his convexity position, it's simply negating the directional risk.

Now, if MMs were drastically short calls and long puts, they would flatten the skew to trade out of this imbalance. Looking at the vol surface, I do not see anything like that for yesterday or today.

 

[arbs-r-us]

Why, why, why did you give up the biggest trading secret? It is holly grail after all!!!

oops....

 

[AAAintheBeltway]

MM hedge delta using stock (in most cases). So, if an MM sells a call, he will instantly buy stock to cover delta. Initial hedging has nothign to do with his convexity position, it's simply negating the directional risk.

Now, if MMs were drastically short calls and long puts, they would flatten the skew to trade out of this imbalance. Looking at the vol surface, I do not see anything like that for yesterday or today.

Don't start bringing distractions like facts and market knowledge into this, dammit. "They" ran the stock down, in fact, you might very well be one of "them" and just trying to cover your tracks.

How else can you explain losses for people following a strategy as sophisticated as going long short dated calls because the underlying was within 10% of par?

 

[stock777]

Don't start bringing distractions like facts and market knowledge into this, dammit. "They" ran the stock down, in fact, you might very well be one of "them" and just trying to cover your tracks.

How else can you explain losses for people following a strategy as sophisticated as going long short dated calls because the underlying was within 10% of par?

I added up the IQ's of all the people that called AAPL straight to 100 and the grand total was 357. Not bad but there were 75 of them. hmmm . can you say imbecile?

 

[JesseJamesFinn]

Are there more Retail or Paper participants playing Apple now that it's down to $92.00 a share?

Apple was easier to read when we had a smaller float, now it's crazy town until I learn how her ebb and flow moves.


If we are confused by the action, imagine all the new day traders and others shaking their heads at Apple's strange moves.

I wonder if it's the HFTS Gang is taking on larger size (200-2000 shares) instead of their previous 13, 23, 87, 177 lot size they did on BATS, EDGX and EDGA before she split.


Hang in there, you'll get the hang of it,, play some One Minute Chess, Video Games or other rapid fire games so you can become one with Apple's price action! Good Luck!

 

[VanishingMediator]

The thing that you seem to have difficulty understanding is that we are not talking about you trading from your mom's basement using techniques you read about in a textbook given to you by brokers who bank on your hedging using such methods.

We are talking about people who can hedge by flashing out quotes on one side of the order book and set the price to whatever they want... the billionaires. When someone purchases a huge block of options, there isn't a huge buy in by whoever sold those options. The opposite occurs, and it immediately moves against the purchasers of the options. This is not me I am talking about, I am talking about watching the purchase of these large blocks and charting the value of those options as well as looking at the underlying afterwords. Forget everything you think you know, although a little common sense would have helped you.

There is absolutely nothing about AAPL's behavior that I find the least bit confusing. The only time it isn't priced to devalue the greatest volume of option contracts sold that day (with perhaps some pressure from previous days where large open interest remains) is when there is huge pressure from investor sentiment. This pressure always dies down though.

 

[tortoise]

I wish I was smart enough to follow this thread.

I'm not, which is why I don't trade options.

 

[TskTsk]

So what you're saying is we should all sell options when large block trades of buying happens?

 

[sle]

We are talking about people who can hedge by flashing out quotes on one side of the order book and set the price to whatever they want... the billionaires. When someone purchases a huge block of options, there isn't a huge buy in by whoever sold those options. The opposite occurs, and it immediately moves against the purchasers of the options. This is not me I am talking about, I am talking about watching the purchase of these large blocks and charting the value of those options as well as looking at the underlying afterwords. Forget everything you think you know, although a little common sense would have helped you.

This is going straight to the hall of fame. I feel like dropping to my knees and yelling " I am not worthy! ".

 

[drownpruf]

The only time it isn't priced to devalue the greatest volume of option contracts sold that day (with perhaps some pressure from previous days where large open interest remains) is when there is huge pressure from investor sentiment. This pressure always dies down though.

omfg. clown shoes. big ones. Pray tell; then why are you such a loser? Why not sell straddles and buy flies indiscriminately?