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Options Mentoring
- Thread starter riskfreetrading
- Start date
Quote from spindr0:
Hey, now there's a plan. Not only will we be able converse about options without your convoluted jibberish filled responses but if we can get everyone to piss you off, you'll have everyone on ignore and no one to talk to here except your multiple handles. "Doos" me a favor and put me on ignore ASAP!
Your screen name is now in the bin. This feature on ET is really great! I will never see your screen name again.
Quote from riskfreetrading:
THEOREM: If realized volty is equal to implied volatility during a period T, and if it is realized on one side only, then the stock will reach a price X in period T (price X is computed using (a formula not published here).
This is a different set of conditions than previously.
Quote from rluser:
This is a different set of conditions than previously.
No, the conditions are the same. The text of the statement is in the forum archives. Here is the link:
http://www.elitetrader.com/vb/showthread.php?s=&postid=2305778&highlight=pythagoras#post2305778
Quote from riskfreetrading:
Try to understand this because it will help you really understand the magniture of what a worse case can be under normal volty conditions.
If realized vol will be the same as currently implied (42.??), and if the current price of SPY ($82.76) is the top price during the next 38 days, we can say this with ABSOLUTE certainty: SPY will reach a price equal to or LESS than $58.75. That is $24 down (with certainty under the above two conditions which is not unrealistic).
So what people see as dramatic moves are normal moves.
There is chance that what I wrote would be a shock to people. You need to understand why it is fundamental truth of how markets work. If you are shocked or your mind cannot accept it, all it says that they you have not fully put your mind around the market.
An answer that were given to the post above:
Quote from dagnyt:
If realized vol will be the same as currently implied (42.??), and if the current price of SPY ($82.76) is the top price during the next 38 days, we can say this with ABSOLUTE certainty: SPY will reach a price equal to or LESS than $58.75. That is $24 down (with certainty under the above two conditions which is not unrealistic).
You can say it with the ABSOLUTE CERTAINTY that you are incorrect. Why:
Stock goes down 5 points. Then 5 more. Then 6 points higher. then down 5. then up again - but never goes above today's top price. Never goes above today's top price. That does not mean it has to go down every day.
Mark
The market has answered Mark. We know the result of the market answer. She told Mark that he was wrong.
Quote from riskfreetrading:
No, the conditions are the same. The text of the statement is in the forum archives. Here is the link:
http://www.elitetrader.com/vb/showthread.php?s=&postid=2305778&highlight=pythagoras#post2305778
"is the top price" != "only realized to the downside" in any language with which I am familiar (an admittedly small set, especially with regard to natural languages)
Quote from rluser:
"is the top price" != "only realized to the downside" in any language with which I am familiar (an admittedly small set, especially with regard to natural languages)
Which one is clearer?
The "the top price" statement is valid because it is an example from the more general statement in the Theorem, which is a copy of a response to Mark's response to my orginal statement.
The language of top was used in the first statement. The language of one side was added because Mark explained that the market may move to the upside as his "proof" of invalidity of my result, which as you just wrote is not the same thing as market moving to the other side.
My original post to to show the OP in that other thread that what he thought was impossible as movement of SPY was in fact a certainty. I think the OP in that thread did not understand that SPY can even reach 76 in 38 days which was a move of only 10 points. The market has mode 20 points in 20 days (half the time). So my estimate of 24 points in 38 days is on target.
Assuming you are the OP on the other thread, the point is that you viewed at the time SPY 76 (may be another level of SPY), as not likely, when in fact it was a certainty under the conditions. Worse my estimate was more than the double of the size of the move they thought not possible. (24 points vs.10 points). At the time I also mentioned that what I wrote may be shocking to some people. The market now does not make it shocking, and the responses to my post were indeed shocking to some people as they started writing ridiculous things and insults disregarding what I wrote, because 24 points may have looked to them at the time as a ridiculous and wrong thing to write.
So I posted in your thread to let you know of that mathematical result, so that you are aware of the magniture of the move.
I wanted to be of help. If you can share what you were thinking at the time it would be helpful to read about it in light of what we now know.
So I posted in your thread to let you know of that mathematical result, so that you are aware of the magniture of the move.
I wanted to be of help. If you can share what you were thinking at the time it would be helpful to read about it in light of what we now know.
Quote from rluser:
JFC dude... you said "SPY below 58.75 in 30 days" which by my calculation is Mar 17. I've got a pair of franklin's sitting here that will bet binary against that. Open an Intrade bet, I'm on. Or find another suitable escrow.
You may be correct, but certainty it is not.
If you want to learn and exchange I will be happy to. If you have other aim, then I am sorry, I will have to move on. Go back and read what I wrote. Everything is in there. I could have added another helpful comment, but I will skipped (at least for now).
PS: Where you did you get the 30 days in that quote from? I just quoted my earlier post and it has in it 38 days? Did you edit anything? If you do not provide a link to the source of your quote, I would assume that you have played with the quote and therefore will put you on ignore. You have 24 hours to answer.