My Options Play

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Quote from stevegee58:

Multi, you alluded to buying front month options that were 1 strike ITM (true?). What other characteristics are you looking for? Historically low IV? (i.e. low time value = cheap)
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I actually prefer 60days out to create room for adjustment, but I do overstep my bounds once in a while.

Can any trader predict Implied or Historical volatility? I think it's much easier to predict price movement than bothering with IV/HV. What do you think?
 
I agree with you there, but the thing about high IV options is that you pay a high premium to be a net buyer. PEET was kind of in the middle in terms of "cheapness".

I guess by buying shorter term options, most of the time value is gone anyway, unless the stock is hyped for other reasons. Going ITM reduces the premium further as well.

I get the sense that you're more interested in the stock's price action itself and that the option's IV, etc come second.
 
Quote from stevegee58:

Multi, you alluded to buying front month options that were 1 strike ITM (true?). What other characteristics are you looking for? Historically low IV? (i.e. low time value = cheap)
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why did you pick historically low IV as an important characteristic?

maybe its not "historically low" for a good reason, i.e. a precursor to much lower or higher prices? I guess some traders have the adage "those that do not learn from history are doomed to repeat it" recorded on audio as well as tatooed on their body so they will only buy so-called cheap options. Kind of like bottom-fishing Some day I'd love to see how many directional traders have gotten hammered and/or missed out big-time by putting 'too much' emphasis on low volatility.

IcE
:cool:
 
All I was saying was that if you buy an option with high IV then you run the risk of IV collapsing. IV could have been unusually high due to keenly anticipated news on the stock. When the news is out, the IV collapses and suddenly the long holders of these options take a loss, even with no movement in the stock's price.

I'd avoid this if possible and buy only low IV options. But that's just me. :cool:
 
Quote from stevegee58:

I agree with you there, but the thing about high IV options is that you pay a high premium to be a net buyer. PEET was kind of in the middle in terms of "cheapness". I guess by buying shorter term options, most of the time value is gone anyway, unless the stock is hyped for other reasons.

I get the sense that you're more interested in the stock's price action itself and that the option's IV, etc comes second.
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Yes! I do credit spread for stocks like EBAY, IBM and other volatile stocks with high IV. My last credit spread was INTC (2002) that netted me 15K. Check this out...
 

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Quote from iceman1:

pinabetal...

we notice you came on this thread to tell him to bail... but have heard from you since then as PEET moved above 32.50 today... why is that? Not reading the thread anymore? :D :D

icE
:cool:
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No I just forgot I had made the post. I see it did go down the next day after I said it would. Then I see it started right back up the next day. I was wrong about it going under 30.00 but it almost did. My outlook is only 1 to 3 days. I have to hand it to Multioption. He has got guts!
 
I see Multioption is VERY lucky. Two trades in a row :)

Now when he posts his next trade there will be some sheep that will follow him, and thats when his luck runs out. :eek:

I give it 1 month maximum for this thread to continue :(
 
Quote from uninvited_guest:

I see Multioption is VERY lucky. Two trades in a row :)

Now when he posts his next trade there will be some sheep that will follow him, and thats when his luck runs out. :eek:

I give it 1 month maximum for this thread to continue :(
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Can I show you something? Check this out...:)

I'll rather not trade than getting myself into something I'm not sure of!:p

Enjoy yourself!
 

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