Gold options..I got roach moteled

I

indahook

My normal markets are the SPX, crude and silver and the DX. But I watch Gold and the long bond. So Monday I see something that makes me want to get short Gold. I`m watching the option chain...not much volume but size represented up and down the box. 3 point spread...no big deal, I often pay up/down the spread to get in or out. All looks good for a purchase.

I buy 1 little GC 750 put for Nov20 exp @ 23.5 the offer. it was bid 21.9...underlying was trading at 845..yay first time trading gold in 7 years of action!

I come in on tuesday and the underlying is at 833 and the put is down almost 5.5 on the offer with a 10 buck spread. I`m like WTF!? Boo....why did I trade gold?!

Did implied volty drop overnight and crush prem....did I get raped by some arb guy? I`m not looking to blame game. I bot em I own em...but I need to avoid this type of mistake in the future.

If somebody can give me some insight I would greatly appreciate it.
 
Sounds pretty fishy.

I'd hang-out in the other metals threads, find out who trades it, and get their insight.

BTW, gold is notorious for lots of game playing, huge spreads and lack of liquidity for shor-term players.
 
Quote from MandelbrotSet:

Sounds pretty fishy.

I'd hang-out in the other metals threads, find out who trades it, and get their insight.

BTW, gold is notorious for lots of game playing, huge spreads and lack of liquidity for shor-term players.
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Honestly I dont mind any of those traits in a market.

Its when I dont know why I got F`ed that bothers me.

Was it a dumb mistake that could have been avoided by looking at simple valuation model before pressing the button....etc
 
Quote from indahook:

Honestly I dont mind any of those traits in a market.

Its when I dont know why I got F`ed that bothers me.

Was it a dumb mistake that could have been avoided by looking at simple valuation model before pressing the button....etc
More...

you entered a long vega position right when the volatility levels were about to reverse its course. in a deep otm contract, delta has very few weight, while vega carries the bulk of it. hence, your position lost value (when vega crushed) despite the underlying movement.

predicting volatility is as difficult as predicting underlying direction. if you want to predict direction dont add another uncertainty to the outcome. in this case, an example would be to enter long a deep itm put which has limited exposure to vega while carrying high delta exposure.
 
Quote from indahook:

Honestly I dont mind any of those traits in a market.

Its when I dont know why I got F`ed that bothers me.

Was it a dumb mistake that could have been avoided by looking at simple valuation model before pressing the button....etc
More...

Gold options suck. I haven't traded them since Q1. I don't know if they're on the screen now but I got hosed in that weird hybrid thingy. Because they were quoted on the screen during RTH I presumed they were actually traded electronically RTH. Instead my orders were routed to the pit and when I wasn't filled immediately I re-entered and wound up triple filled.

My tale of woe aside you paid some pretty high vol. One month to go, 100 bucks OTM, $20 plus in premo. Obviously when the daily ranges are 80 bucks no one is standing in line to write cheap options but as soon as the market tightened another story.
 
Quote from asap:

you entered a long vega position right when the volatility levels were about to reverse its course. in a deep otm contract, delta has very few weight, while vega carries the bulk of it. hence, your position lost value (when vega crushed) despite the underlying movement.

predicting volatility is as difficult as predicting underlying direction. if you want to predict direction dont add another uncertainty to the outcome. in this case, an example would be to enter long a deep itm put which has limited exposure to vega while carrying high delta exposure.
More...


Thanks much asap. If you chart volty take a look at around 2pm on monday...i`m sure to have caught the tippy top.
 
Quote from Pa(b)st Prime:

Gold options suck. I haven't traded them since Q1. I don't know if they're on the screen now but I got hosed in that weird hybrid thingy. Because they were quoted on the screen during RTH I presumed they were actually traded electronically RTH. Instead my orders were routed to the pit and when I wasn't filled immediately I re-entered and wound up triple filled.

My tale of woe aside you paid some pretty high vol. One month to go, 100 bucks OTM, $20 plus in premo. Obviously when the daily ranges are 80 bucks no one is standing in line to write cheap options but as soon as the market tightened another story.
More...

That is no fun either.

And tighten they did.....ugh.

Well, as we speak the underlying is only 4 pnts away from my entry...so I have to hold em for now. Maybe I get lucky and they dump and volty rises again. Maybe not...
 
Gold going my way a bit. Still spread the F out though...7.50x34

almost comical...definately criminal

I have watched a large player get long about 60 750 puts over the course of 3 days. So i`m sure the MM that wrote them is squirming if outright.
 
Quote from indahook:

Gold going my way a bit. Still spread the F out though...7.50x34

almost comical...definately criminal

I have watched a large player get long about 60 750 puts over the course of 3 days. So i`m sure the MM that wrote them is squirming if outright.
More...


was that recently??
 
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