I do not know if GS themselves hold positions or not, but I do know that they follow the stocks their customers have interest in. A brokerage would very seldom analyse a company if they were not holders/pushing it to customers. Thats the function, its not to please the media and us ET-traders.
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Gooooooogle
- Thread starter IV_Trader
- Start date
Quote from IV_Trader:
Mav , why DID they took the vols all the way to 70th ?
How do u explain it ?
Vols are a function of time. As time passes, especially close to expiration, vols naturally drift higher due to the strong bids in the options. You will always see this when stocks report inside of 3 weeks or so to expiration. If this were an expiration week, front month vols would actually be over 100. It's not that they are taking the vols higher, its just that the options are being bid into a short duration period.
This is why back month options trade at lower vols, they have way more time. This is also why if you sell front month options into an earnings report hoping to earn decay, your position won't decay, it will actually give you negative decay which is a function of the rising vols into the report.
Quote from Maverick74:
Vols are a function of time. As time passes, especially close to expiration, vols naturally drift higher due to the strong bids in the options. You will always see this when stocks report inside of 3 weeks or so to expiration. If this were an expiration week, front month vols would actually be over 100. It's not that they are taking the vols higher, its just that the options are being bid into a short duration period.
This is why back month options trade at lower vols, they have way more time. This is also why if you sell front month options into an earnings report hoping to earn decay, your position won't decay, it will actually give you negative decay which is a function of the rising vols into the report.
I know all this , I run pretty accurate stats (including front month/back month vols ratio broken by # of weeks to exp) , I just never was so wrong on expected (my was 50 tops on goog) vols on a big stock like GOOG
Quote from IV_Trader:
I know all this , I run pretty accurate stats (including front month/back month vols ratio broken by # of weeks to exp) , I just never was so wrong on expected (my was 50 tops on goog) vols on a big stock like GOOG
There is no ceiling as to how high vols can go when you remove time. You can't model the vols in the front month specifically because of this. You model vols in the back month.
Quote from Maverick74:
There is no ceiling as to how high vols can go when you remove time. You can't model the vols in the front month specifically because of this. You model vols in the back month.
same with the back month ... I had it at 40 and its hit 55 (!).
Anyway , thanks a lot for input , Mav
Quote from Maverick74:
Good for you Martin, then put your money where your mouth is. You don't need to scream to the world what you want to do, just do it already.
Trust me, I have. But this isn't a journal last I checked. And you've been ranting about how great Google is for months without posting an entry that I can remember.
Martin
Quote from Maverick74:
There is no ceiling as to how high vols can go when you remove time. You can't model the vols in the front month specifically because of this. You model vols in the back month.
Hi Maverick,
I shorted Feb 440Call/410Put and long Mar 430Call/420Put the day before, for $23.30. I am new to this kind of IV trades and it looks the position will be in the green if it opens at the level where GOOG is AH now. But if it opens above 400, I am not so sure. Of course the front month IV crush will help me but Mar IV will come down too.
Just want to hear from you who has experience what is the best course of action. My plan is to sell it, not to do any fancy adjustment stuff.
Thanks very much in advance.
Opra