Options Price mystery (?)
- Thread starter mayorq
- Start date
The mystery is why are you trading options without understanding this first?
Quote from mayorq:
hey folks,
i recently started day trading using options. i'm with optionshouse. here is the mystery: today, i bought $27 strike price, Jun expiry, put options on ORCL for $.73 (bid was $.72 / ask was $.73) at 06:55am PST. At the time, ORCL stock price was $26.70.
Fast forward to closing time, where ORCL closed @ $26.70, but--here's the mystery part--the bid was $.69 / ask $.71!
What gives?! Why is the bid $0.03 less, when the stock price is the same? I've experienced the same with other stocks as well. ORCL is a very liquid stock, so I don't think it has to do with liquidity.
Much appreciated for an answer that even I can understandThank you!
Since the drop in price was intraday, it is attributed to a drop in IV. But that is just how it is measured.
Whatever reason that you want to attribute to the drop is discretionary. Time decay, drop in vol, MMs playing games.
Since it is front month, and the measurement is from near the open to close, time decay is a reasonable assumption.
Had the option price been exactly the same would you then conclude that there was a rise in vol?
Whatever reason that you want to attribute to the drop is discretionary. Time decay, drop in vol, MMs playing games.
Since it is front month, and the measurement is from near the open to close, time decay is a reasonable assumption.
Had the option price been exactly the same would you then conclude that there was a rise in vol?
Options Price mystery (?)
No mystery.
Buyer vs. Sellers
When more are Buying than Selling, it goes up.
When more are Selling than Buying, it goes down.
Why?
Buyers want to Buy.
Sellers want to Sell.
But, really, why?
Supply and demand.
Perceived bargain.
Locking-in profits.
Impatience.
Inexperience.
And also...
Because they are a nerd who loves "BS" math.
(BS means Black Scholes?)
No mystery.
Buyer vs. Sellers
When more are Buying than Selling, it goes up.
When more are Selling than Buying, it goes down.
Why?
Buyers want to Buy.
Sellers want to Sell.
But, really, why?
Supply and demand.
Perceived bargain.
Locking-in profits.
Impatience.
Inexperience.
And also...
Because they are a nerd who loves "BS" math.
(BS means Black Scholes?)
interesting
Quote from mayorq:
hey folks,
i recently started day trading using options. i'm with optionshouse. here is the mystery: today, i bought $27 strike price, Jun expiry, put options on ORCL for $.73 (bid was $.72 / ask was $.73) at 06:55am PST. At the time, ORCL stock price was $26.70.
Fast forward to closing time, where ORCL closed @ $26.70, but--here's the mystery part--the bid was $.69 / ask $.71!
What gives?! Why is the bid $0.03 less, when the stock price is the same? I've experienced the same with other stocks as well. ORCL is a very liquid stock, so I don't think it has to do with liquidity.
Much appreciated for an answer that even I can understand
it's be easier to just give your money to charity... and you would feel better also !
bonne chance