Help, Option MM is eye balling me !!

T

traitor786

I hate to bet so much on the replies i will get in a forum. But time is an issue, so please respond if your giving your honest opinion and have nothing to gain by posting except helping some one thank you

With my limited experience in options (none)

A premiss I will introduce is one of the Market Maker (or nature of stops or what ever you may want to call it) manipulate the market in a way to trap investors

One other premiss will be that the options market maker (trying to keep price stable to collect premiums ) Works in coordination with the commodity market maker to get maximum profit between the two. (one market maker is willing to loose a bit so the other can make more)

Typically, the idea is price makes a "fake" move to take out stops and scare people in to selling. Then it goes the opposite way with fuel at its back.

Lets assume this happens 50% of the time and the other 50% the break out is real.

Either way, many people (higher volume) may buy or sell an option at the point of break out. (an assumption)

Now there may be a Market maker (or what ever force) in options, seeing a break out and options being placed, a market maker would know when the the majority of options will expire and he may keep price in a tight range until the point of expiration so that people loose their premiums to the market maker (or what ever).

The day after the high amount of options expire (at a loss due to premium) fewer people renew their option as they see stability. and feel the cost of the insurance is not worth it.



So they see stability once again and dont get another option. with less options the market maker is more inclined to make a move that is big and make money through the non option move.

Option MM profits ---> less options as people see stability-->commodity MM starts to move price. people would of been better off renewing their options.


By now you see I know little of options unless I miraculously understood something at a quick glance. but I do like to watch out for people tricking me.

How can I see if the premise I have is true. (I use think or swim paper trading)

Also do you think one should worry about such a thing ?

Any advice at all would be greatly helpful.

I do not want to close my buy order on gold and what to learn to hedge against it instead of always closing, even if this is not the best way, It is good learning by doing. but I need to move fast now and get my option at the same time every one else is which scares me a bit.

I want to be hedged is commodities go down as they have broken support

thank you
 
Quote from traitor786:

I hate to bet so much on the replies i will get in a forum. But time is an issue, so please respond if your giving your honest opinion and have nothing to gain by posting except helping some one thank you

With my limited experience in options (none)

A premiss I will introduce is one of the Market Maker (or nature of stops or what ever you may want to call it) manipulate the market in a way to trap investors

One other premiss will be that the options market maker (trying to keep price stable to collect premiums ) Works in coordination with the commodity market maker to get maximum profit between the two. (one market maker is willing to loose a bit so the other can make more)

Typically, the idea is price makes a "fake" move to take out stops and scare people in to selling. Then it goes the opposite way with fuel at its back.

Lets assume this happens 50% of the time and the other 50% the break out is real.

Either way, many people (higher volume) may buy or sell an option at the point of break out. (an assumption)

Now there may be a Market maker (or what ever force) in options, seeing a break out and options being placed, a market maker would know when the the majority of options will expire and he may keep price in a tight range until the point of expiration so that people loose their premiums to the market maker (or what ever).

The day after the high amount of options expire (at a loss due to premium) fewer people renew their option as they see stability. and feel the cost of the insurance is not worth it.



So they see stability once again and dont get another option. with less options the market maker is more inclined to make a move that is big and make money through the non option move.

Option MM profits ---> less options as people see stability-->commodity MM starts to move price. people would of been better off renewing their options.


By now you see I know little of options unless I miraculously understood something at a quick glance. but I do like to watch out for people tricking me.

How can I see if the premise I have is true. (I use think or swim paper trading)

Also do you think one should worry about such a thing ?

Any advice at all would be greatly helpful.

I do not want to close my buy order on gold and what to learn to hedge against it instead of always closing, even if this is not the best way, It is good learning by doing. but I need to move fast now and get my option at the same time every one else is which scares me a bit.

I want to be hedged is commodities go down as they have broken support

thank you
More...

Yeah, these MMers are targeting your one lots with their meellions.
 
Quote from atticus:

Yeah, these MMers are targeting your one lots with their meellions.
More...

I knew it !!!!

but seriously. I assume many hedged through option as multi year support was broken some one should be taking advantage of that. I wonder if the cost of hedging gold has gone to a high also ?

as for my .1 lot, how can i use it to take the MM's millions ?
 
Quote from traitor786:

I knew it !!!!

but seriously. I assume many hedged through option as multi year support was broken some one should be taking advantage of that. I wonder if the cost of hedging gold has gone to a high also ?

as for my .1 lot, how can i use it to take the MM's millions ?
More...

you need to read some more about options. no offense.. a market maker isn't controlling the direction of the underlying in some grand scheme ... market making is about hedging out risk.. typically with static replication if they can get to it..

read a few books for me.. report back..
1. Hull options futures and other derivatives
2. Baird options maket Making
3. read this paper.. http://cfe.cboe.com/education/TradingVolatility.pdf
 
Quote from traitor786:

...A premiss I will introduce is one of the Market Maker (or nature of stops or what ever you may want to call it) manipulate the market in a way to trap investors

One other premiss will be that the options market maker (trying to keep price stable to collect premiums ) Works in coordination with the commodity market maker to get maximum profit between the two. (one market maker is willing to loose a bit so the other can make more)...
More...

I doubt it.
 
Quote from Lucrum:

I doubt it.
More...

this is a ludicrous thread.. terrible... don't doubt it.. no market maker is eyeballing any small trader.. nor do they have the capacity to control the underlying.. besides.. most MMers are hedging with options and trying to NOT use the underlying..
 
In addition to what Atticus said, you have access to much of the same information that a market maker does. Not everything, of course, and not in real time (unless you want to pay for it), but there is sufficient price, volume, time & sales, open interest and volatility data to prevent the (imaginary) man from keepin' ya' down.
 
Thank you all for your response. The imaginary man can simply be price moving around and stops being triggered.

In no way am i under the impression some one is trying take my ounce or 2.

What I am wondering is in stocks, some times you will see price make a fake break out for WHATEVER reason (MM or stop triggering)

We see the same today in gold. people selling as support is broken.

There is nothing new or no conspiracy to take my cents.

people going for a piss is more of an issue then my trade.

What i am wondering is on the side of option (which I have no experience in )
and sadly I do not have time to read a book.

Recently i changed my opinion on the metal, shortly after (today) price fell.

now panic and fear kick in. while i have issue with my broker.

I need to hedge instead of liquidating.

but i need to fast. I feel making a rash decision to hedge being unaware of the deeper aspects at this point is better then doing nothing.

So I want to try to use options to protect myself. Assuming I will loose my insurance payment and limit loss.

Yes the thread is stupid.

I am wondering from people that have experience with options/futures If they have noticed a statistical situation in which there is such a break out and people run to hedge and all get screwed over when many of them take the same side of the insurance.

In stocks, we say go with trend which means little as it is subjective.

I am wondering if some one with experience can tell me that this "trade" is one that is not a 50 50 and Usually results in a lose in option and a loss in the trade one was hedging against.

If some one would ask me if they should buy a break out I would tell them watch out as it may be a fake break or there may be a retrace that will happen and take out their stop before continuing.

I would tell them I have no idea of the statistics behind it in the long term but short term I had more losses playing their strategy. but anything can happen.

I would give them a heads up that maybe joining the masses to late is not the best idea. but anything can happen, i would show them and example of both situations and let them decide. if it was about entering a market i would tell them to read and learn and watch. but if they needed to hedge i would tell them that doing nothing is bad idea. since life is a 50 50 and he thinks price is going the wrong way either close the position or hope they play it right.

Some times knowing that your are in a 50 50 situation is good. I am just wondering about many people entering the market with the ability to excersis in a month would create. Since the end result happens within a given time frame with an expiration date, there may be alot of counter trades done to take advantage of all those hedging today .

There are many things I am trying to learn fast, I understand i am likely to make a mistake, But maybe the mistake is not as bad as doing nothing.

Even at that it is better to loose by having tried something then just sit like a bitcoin holder watching price fall and hoping.


I appreciate the attention in this thread, I understand the attitude. if there was no issue with my broker i would gladly sell at a loose.

So the question is

what tends to happen when a bunch of people hedge through use of an option/future. of an instrument failing?

what tende happens on experiation?

or is all a 50 50.

keep in mind I will have 2 positions, one of which is hedge. many people will be in the same boat.

sorry about the long post.
 
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