C at this level
- Thread starter cubsguy81
- Start date
Gubinec,
Respectfully you are not correct. There are several reasons why calls being more active than puts can have an impact on prices.
Firstly and most important is if the counter party is a market maker. Considering how the CBOE and others in my opinion are criminal in their non level playing field (only market makers can make a market i.e. bid and ask at same time) the odds are very likely that a counter party is a market maker or at least proportionately more so. Market makers will often hedge options that they are writing. so large buying of calls or puts can drive the market a little bit (how little depends on how easily any given large player can impact it)
The next biggest factor is who is selling the options. if owners of the stock are selling the calls because they want to get out and/or do not think the price is going higher this can be bearish and vise versa for puts.
so it depends on who is buying and who is selling. If the call volume on any given stock is going up and the price is going higher (especially the IV) then that is generally more bullish but the opposite is also true to perhaps a lessor degree.
I know a lot of people put a lot of faith in call/put volume including some people on "that nbc" channel but remember that even a broken clock is right twice a day and other than some pricing models that are clearly in error like the B.S. put pricing model options are priced about right.
I know its a complicated answer but the fact remains that options are way more complicated than most understand. It is a reason why I almost always will sell options instead of taking a stock long/short over any period of time.
Best to you
ah, yes, I am long C and did not sell puts because the stock is actually low enough risk that the little bit of risk avoided by selling naked puts is more than offset by the potential gain lost if this is a 1.5 -2 banger (I been buying and selling C in small amounts since the record secondary offer. I wish all stocks acted like this. They are currently priced for BK and it is pretty clear that they are not going under so anything under 5 seems to be a fair price and anything under 4 is a great price IMHO.)
Respectfully you are not correct. There are several reasons why calls being more active than puts can have an impact on prices.
Firstly and most important is if the counter party is a market maker. Considering how the CBOE and others in my opinion are criminal in their non level playing field (only market makers can make a market i.e. bid and ask at same time) the odds are very likely that a counter party is a market maker or at least proportionately more so. Market makers will often hedge options that they are writing. so large buying of calls or puts can drive the market a little bit (how little depends on how easily any given large player can impact it)
The next biggest factor is who is selling the options. if owners of the stock are selling the calls because they want to get out and/or do not think the price is going higher this can be bearish and vise versa for puts.
so it depends on who is buying and who is selling. If the call volume on any given stock is going up and the price is going higher (especially the IV) then that is generally more bullish but the opposite is also true to perhaps a lessor degree.
I know a lot of people put a lot of faith in call/put volume including some people on "that nbc" channel but remember that even a broken clock is right twice a day and other than some pricing models that are clearly in error like the B.S. put pricing model options are priced about right.
I know its a complicated answer but the fact remains that options are way more complicated than most understand. It is a reason why I almost always will sell options instead of taking a stock long/short over any period of time.
Best to you
ah, yes, I am long C and did not sell puts because the stock is actually low enough risk that the little bit of risk avoided by selling naked puts is more than offset by the potential gain lost if this is a 1.5 -2 banger (I been buying and selling C in small amounts since the record secondary offer. I wish all stocks acted like this. They are currently priced for BK and it is pretty clear that they are not going under so anything under 5 seems to be a fair price and anything under 4 is a great price IMHO.)
Anyone thinks the MM will jerk around the Apr 10 $5 options at expiration? It's near ATM...
Gubinec,
I worked in finance and banking for the last 20 years of my career before I retired to trade. People who worked in that industry have been terrified for years of what could and did happen. Several I talked to in recent years said we would now be in a depression if these bailouts had not taken place.
Several times I was in meetings when bank regulators were present. It was like old home week each time. All of the regulators were hired from the same banks they regulated and we all knew each other.
Is the big bank threat over? No its not and they know it. It will happen again if it is not fixed. But, that is why the big banks spend lobbying in the 100s of millions a year to keep their party going. With the payouts in the 10s of billions for bankers their only interest is to collect now and let the next guy handle the problem. C is typical of this group.
I worked in finance and banking for the last 20 years of my career before I retired to trade. People who worked in that industry have been terrified for years of what could and did happen. Several I talked to in recent years said we would now be in a depression if these bailouts had not taken place.
Several times I was in meetings when bank regulators were present. It was like old home week each time. All of the regulators were hired from the same banks they regulated and we all knew each other.
Is the big bank threat over? No its not and they know it. It will happen again if it is not fixed. But, that is why the big banks spend lobbying in the 100s of millions a year to keep their party going. With the payouts in the 10s of billions for bankers their only interest is to collect now and let the next guy handle the problem. C is typical of this group.
Quote from Gubinec:
Free Thinker, DAMN! You registered here when I was 10 years old! Respect!
I think 5 years ago no one would have guessed that govt would start bailing out the largest global banks. Ever since that happened, and with the printing press running, I say anything is fair game until we start seeing some sound monetary policies.
C doesn't have to trade higher than 10 for that call to go up tenfold. Not unless you want to exercise it instead of selling it.
I dont like to buy companies that lose money.
CNBC is bulling C. Is it really significant if it trades above $5?
That was a lousy close. So much for CNBC's cheering...
CNBC is - how shall I put it - a huge pile of crap and a waste of airtime.
All their reporting is reactive to whatever the flavor of the moment is. I can't recall ever, at any time, hearing anything on CNBC that was any benefit to me. Any "news" that might possibly be of benefit is at least 30 minutes behind the market.
Is the S&P down? Hell, the sky is falling and we're presented with 50 talking heads who are telling us why.
S&P up? Hop on board folks, and don't miss the train.
C hits 5 and right away it's a special report. And right away it reverses.
Watch the Comedy channel if you must watch something, and your trading will be better for it.
Normally these round numbers, or numbers ending in 5's and 0 tend to have a psychological impact on crowd behavior. So I would expect resistance at 5, and a close at or below.
I'm just guessing, but we will probably try and test 5 again tomorrow givin the wide range we had today, and the number of shares traded.
KON
I'm just guessing, but we will probably try and test 5 again tomorrow givin the wide range we had today, and the number of shares traded.
KON