Rookie needs help decoding options and where to begin?

[freeManSon]

Take the actual IVs and build indexes of them. Can use cap weightings, sector comp, related names, etc.

You can build an index by aggregating normalized intra-day IV. Returns data can also be indexed.

Another abbreviation - IV? Implied Volatility? Will check it out. Thanks!

 

[wartrace]

Option Volatility and Pricing: Advanced Trading Strategies and Techniques
by Sheldon Natenberg

Read this book

 

[newwurldmn]

I gave your first like and almost took it away because you are listening to Quanto.

Many people have studied OI and volume but the results (at least publicly) aren’t very good. The reason is that you don’t know the motivation of the buyer and the seller. If both are directional then there will be no impact. If one is not directional there will be an impact (especially if the directional guy is buying). If both are not directional then there might be an impact but it won’t be perpetrated by the options trade itself.

Further, you have to look at options in totality with their underlying as a lot of the risks generated from the OI is offset within other OI.

 

[zdreg]

That I already have mastered. For you though, when you feel lonely I can recommend chatgpt.

Then decoding options will be a snap. However,there is a big difference between understanding and decoding.

 

[Quanto]

I appreciate greatly for you reaching out and taking time to reply back. I thought as a beginner there was only buying puts and calls =) Many new abbreviations to understand but I am getting there ....slowly.
Now where can I get my hands on historical data? Need to do some programming (Python) and models to test few things.
And I will not do a single trade before I understand - everything.
Once again, a big thank you!

Getting historical options data is not easy, and is costly :-(
Some companies offer historical options data, for example ORATS here (they have also special prices for ET users, just ask them).

A budget solution for some few select tickers like SPX could maybe the following be (but I have no experience with them):
https://www.optionsdx.com/shop/

Another possibility is to have an API access to your broker and load from there if they have historical data, OR create your own database (ie. store in directories and files, or in a real database) by making snapshot downloads via the API say every 15 minutes of the realtime options chain data.

Another budget solution is YahaooFinance via API access: https://financeapi.net/pricing
But I think they don't offer historical data, just current data 15 minutes or so delayed.

You can also ask and also search in the "Data Sets and Feeds" forum here.

 

[freeManSon]

Then decoding options will be a snap. However,there is a big difference between understanding and decoding.

=)

I gave your first like and almost took it away because you are listening to Quanto.

Many people have studied OI and volume but the results (at least publicly) aren’t very good. The reason is that you don’t know the motivation of the buyer and the seller. If both are directional then there will be no impact. If one is not directional there will be an impact (especially if the directional guy is buying). If both are not directional then there might be an impact but it won’t be perpetrated by the options trade itself.

Further, you have to look at options in totality with their underlying as a lot of the risks generated from the OI is offset within other OI.

I listen to all and make judgment self. Like when I read every book there was to read about trading futures and fx...in the end 99.9% of books was good for fireplace to keep you warm on winter nights. =) And please do not remove the like - did not know there was a war going on in here, but my options are few ..lol
Visited many discord channels and came to conclusion all was in the same category as the books I mentioned above.
So here I am! And I like it!

 

[zdreg]

And please do not remove the like

Like is an option to rate a post. Removing the like may be due to a typo or a change of mind.

 

[Cabin1111]

I am not this person...

Any fair/good trader can hold a 1/2 hour conversation about the below...

Could you talk with yourself or to anybody about how market makers work and how dark pools work??

Something to chew on...

 

[zghorner]

I have honestly never looked at it or found it important at least not when trading futures. Will probably upset many saying so, but for me it is of less weight.
Thanks for reply =) Appreciated!

I can tell you are going to make a lot of money.

 

[taowave]

Read a decent book on options that's digestable,and look at a program like OptionStrat.I use Orats,but it's above your pay grade right now..

Optionstrat is great for beginners..

I wouldn't waste your time with OI and volume.Understand the option greeks , Vol and take it from there..

Greetings,
My first post and step to learn everything there is about options.
Have been trading for a while mainly futures and forex and I am very happy to find this place.

I thought I knew it all and then started to look into options and my self-esteem dropped to bottom low. Its a complex topic but I am trying slowly to decode what everything means and mechanics of options.

I have start looking at OI - Open interest and Volume. Is it possible to get a "clue" how price will move the next day by studying just OI and Volume for C and P after close of trading-day?? Or am I thinking this wrong?
Its hard in the beginning knowing what and not to look for.