Purely Mechanical Option Trading

Quote from austinp:

<i>"Quote from jeffalvinson:

Example No. 2
You bought an option for 2.50 and the OEX index then moves several points (5 to 8 points) in your trade direction, but the bid remains deadpan at 2.00. Is that manual manipulation? or lack of volume? I believe both.</i>
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That's absurd. OK, I was mistaken in my belief this was a serious thread. My apologies.

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If an OEX call option at 500 strike is bought for $250 with index trading at 495 and the index moves +8pts to 503.00 the now itm call will be worth at least $400 at any part of the option's expiry cycle.

If that happens during the last two days of expiry, a $250 OEX option in quoted example goes $600 ~ $750+ with ease. It had to be slightly otm in the first place for such a price, then +8pt index move (+16pt SPX move) takes it somewhere itm.

Other than any OEX floor traders or market makers here, I traded more collective OEX volume from 1999 thru 2002 than most of the 100K aliases who've passed thru this site. I never saw even a 2pt OEX move (4pt SPX move) in favor of an option's direction which did not increase value. The spread may widen momentarily where bid remains frozen, but it must revert to the mean if price move is legit.
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I think most the rational people with experience agree with you Austin.

IMO its not worth debating since it does not happen.

The najarian thing is silly. He's a CBOE member do you think he's going to publish DVD's that say the CBOE is rigged?
 
Just bought SPY 138 calls at 2.10.
Bracket set at
2.65 sell limit.
1.60 stop limit.

04-16 MAY138C 1.50 1.75 2.60 1.68 2.60
2008 MAY136P 4.85 3.85 3.85 2.58 2.58
3D: C=5-0-42=L4UP P=7-18-2=L2DN
9D: C=30-16-47=L4UP P=39-50-27=L2DN
MM: CT3D=UP 9D=UP PT3D=DN 9D=DN
Decision:
Buy= MAY138C 2.10
Exit= MAY138C 2.65
 
Nice job you bought the dead low of the day and sold a couple pennies off the dead top. If you could post a few like that then I think people might raise a few eyebrows
 
Quote from dipper17:

Apple and King, ...... I did not know of it nor, obviously did Jeff.

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I thought to myself that was a bit of an unfair comment to make when jeffalvinson has said time and again his system looks at previous options prices.
I think your credibility needs to be questioned now, not jeffalvinson's as you have made the claim you are/were an Options professional.

Sorry, not wishing to detract from the thread, but jeff needs support over this point.

The comment: "nor, obviously did Jeff. " is really a cheap sneaky vindictive comment.
 
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