Option trade idea on YHOO
- Thread starter hajimow
- Start date
Quote from Put_Master:
<<< what do you think about that! >>>
I think... therefore I am.
I also think, unless you know whether the open interest represents mostly buyers or sellers of a call or put, it tells you nothing useful.
Much like this post of mine
You guys do understand that all this info is meaningless, right? The only thing that matters is where the conversion is trading, right? And, they are all trading within a penny or two of fair value based on interest rates and time until expiration, right?
Don
90% of the time, the only active options for YHOO are the next months options. It seems that the investors don't want to gamble long term. Either they are covered calls or protective puts or just naked. Call 16 is the most active and PUT 15 and 16 are the most active.
By the way, when I call YHOO a buy, don't think that I believe YHOO will go to 18 in a month (although it might happen and a buyout might take it to an unforseen territory but jumping to 16 will boost my account by 20% !!.
Don
Always enjoy the reads inside the Stocks and commodities mag.. So you don't think any valuable information could be extracted from open interest data? or even from large buy or sell trades at certain strikes?
And why does only the conversion and its relation to fair value really matter? because basically its priced perfectly? doesn't that assume volatility remains constant? i'm not at all questioning your reasoning.. i just am learning so please excuse the request for clarification.
<<< You guys do understand that all this info is meaningless, right? >>>
I agree.
It's mostly just the clueless looking for clues where there are none.
The only example I can site where option volume "may be" a tiny bit useful is as follows.
Suppose stock strike has a history of averaging 100 - 200 contracts and one day it's suddenly in the 3,000 - 6,000 range.
If, and i stress "if", that mass of call vol was initiated on the bid vs the ask, that would seem to be a very bullish signal that some big money was placing a huge bet on something positive occuring during the life of the contract.
The implication would be someone having inside info.
On the other hand, it could be an over concentrated moron risk taker too.
I really never pay attention to open interest.
I agree.
It's mostly just the clueless looking for clues where there are none.
The only example I can site where option volume "may be" a tiny bit useful is as follows.
Suppose stock strike has a history of averaging 100 - 200 contracts and one day it's suddenly in the 3,000 - 6,000 range.
If, and i stress "if", that mass of call vol was initiated on the bid vs the ask, that would seem to be a very bullish signal that some big money was placing a huge bet on something positive occuring during the life of the contract.
The implication would be someone having inside info.
On the other hand, it could be an over concentrated moron risk taker too.
I really never pay attention to open interest.
I suggest learning how to analyze the trend of a companies quarterly balance sheet statement, income statement, cash flow statement, debt levels and various company/sector ratio comparisions,.... instead of useless info like open interest.
If you are looking for clues, that's where the clues are actually hidden... in plain sight.
And the nice thing is, you really don't need to read the numbers on each line.
If you look at just 3 - 4 items on those pages, you will learn a lot about the company you are about to risk thousands of dollars on.
Takes only about 10 minutes to view and analyze all the things I listed above.
Unfortunately, you need to spend time learning how to analyze it first. But there are plenty of easy to read books out there.
I know this is an option board, and most folks are not interested in anything but pretty charts that can be viewed and analyzed in 10 - 30 seconds.
But if you want clues.... that's where they are.
If you are looking for clues, that's where the clues are actually hidden... in plain sight.
And the nice thing is, you really don't need to read the numbers on each line.
If you look at just 3 - 4 items on those pages, you will learn a lot about the company you are about to risk thousands of dollars on.
Takes only about 10 minutes to view and analyze all the things I listed above.
Unfortunately, you need to spend time learning how to analyze it first. But there are plenty of easy to read books out there.
I know this is an option board, and most folks are not interested in anything but pretty charts that can be viewed and analyzed in 10 - 30 seconds.
But if you want clues.... that's where they are.