Anyone selling premium only

Quote from oldnemesis:

It's amazing that Put-Master has apparently never heard of Black–Scholes or at least has no clue what the Black–Scholes equation is calculating.
Just amazing
:-)
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This silly comment from someone who brags about earning 5 - 8% annualized returns, on most of his option trades.
Clearly he thinks most of his trade credits are over valued.
LOL!:D

I would suggest traders view the BS model credits, in the context of todays VIX vs the VIX of a year or two ago.
 
If the question some are having, of whether an option is "briefly" over valued, is one of academic analysis of the BS model,... that is not a discussion I was having.
Whether that may briefly occur, due to fluctuating variables, is irrelevant to the discussion i was having.
My discussion was clinically oriented. Not a discussion for the theoretical school class room.
 
Quote from Put_Master:

If the question some are having, of whether an option is "briefly" over valued, is one of academic analysis of the BS model,... that is not a discussion I was having.
Whether that may briefly occur, due to fluctuating variables, is irrelevant to the discussion i was having.
My discussion was clinically oriented. Not a discussion for the theoretical school class room.
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Briefly, as in "since 1987" you mean? I consider that somewhat persistent. sle asked what was your basis for trading volatility.
 
Quote from atticus:

Briefly, as in "since 1987" you mean? I consider that somewhat persistent.
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I was not refering to 1987 or any other period.
Nor would i say credits were over valued back then during the crash.
They were probably reasonably valued, given the "context' of the times.
In "hindsight", investors should have locked in those fantastic credits for a LEAPS trade.... as the market began it's recovery within the next week.
1987 is actually a pretty good example of the issue of evaluating the over/under/reasonable value of credits... in hindsight.

Again, I don't view the value of numbers in a vaccum.
I view them in the "context" of that particular trading day, and what is occuring that day.
And in the context of the "probability" of the trade succeeding.
And in the context of the numbers meeting or exceeding my minimally acceptable ROI.
And in the context of comparing the % numbers of a closer month expy date, with one further away.
And so on.....
 
Quote from Put_Master:

I was not refering to 1987 or any other period.
Nor would i say credits were over valued back then during the crash.
They were probably reasonably valued, given the "context' of the times.
In "hindsight", investors should have locked in those fantastic credits for a LEAPS trade.... as the market began it's recovery within the next week.
1987 is actually a pretty good example of the issue of evaluating the over/under/reasonable value of credits... in hindsight.

Again, I don't view the value of number in a vaccum.
I view them in the "context" of that particular trading day, and what is occuring that day.
And in the context of the "probability" of the trade succeeding.
And in the context of the numbers meeting or exceeding my minimally acceptable ROI.
And in the context of comparing the % numbers of a closer month expy date, with one further away.
And so on.....
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Referring to the persistence of the vol-smile since 1987. >25Y. And any probability is based UPON A VOL-FIGURE, or some tarot cards you are playing with.

Forget it. Either you're playing or are legit thick. You should stick to your own thread.
 
Quote from atticus:

Referring to the persistence of the vol-smile since 1987. >25Y. And any probability is based UPON A VOL-FIGURE, or some tarot cards you are playing with.

Forget it. Either you're playing or are legit thick. You should stick to your own thread.
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You brought up 1987. Not me.
It's like some traders like to compare a stocks IV of today, to last years, to determine if the current credit is over/under/reasonably valued.
I think that is silly.
I prefer a more realistic approach, when evaluating a current credit.
 
Quote from Put_Master:

You brought up 1987. Not me.
It's like some traders like to compare a stocks IV of today, to last years, to determine if the current credit is over/under/reasonably valued.
I think that is silly.
I prefer a more realistic approach, when evaluating a current credit.
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You stated "briefly overvalued" to imply high-frequency or somehow unobtainable or too small to capture. Index options are highly "skewed" and have been so since 1987.

That whooshing sound you're hearing must be deafening.
 
Quote from Put_Master:


My discussion was clinically oriented. Not a discussion for the theoretical school class room.
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I think you mean practical. No clinics/clinicians here.

SPX strikes under the mkt are overvalued. It's persistent. It's been so since 1987. I can sell a put 300bp over ATM implied vol, all day, every day. If you value the benefits of surviving to the "terminal distribution" you would know that "relative value" is the only value worth discussing.
 
Quote from atticus:

<<< You stated "briefly overvalued" to imply high-frequency or somehow unobtainable or too small to capture. >>>

I was implying that when a premium is "briefly" a better deal than expected, per the BS, it's unlikely to last long enough for the average trader to lock it in, unless they happen to be viewing it at the time.


<<< I think you mean practical. No clinics here. >>>

Yes, practical would have been a better word selection.
I have a medical/hospital back ground, so I often think more in terms of "clinical".


<<< Index options are highly "skewed" and have been so since 1987.

Hence the reason i stated I was not refering to your index numbers, as I don't trade indexes,... and thus have no context with which to interpret those numbers.
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