Well said guys. Ok so I went ahead and put in a market order. Your right Spindr0 but its 4:30am and this is my only chance to do something till later on so I threw in my order. I learn things better when it costs me. Hopefully it doesn't costs too much cause I already understand what i did wrong!
Some criticism please
- Thread starter mynd66
- Start date
is it good option to do straddle right now?
i am planning to go for AAPL but volatility is 67 %. end of april APPL vol was 40 %.
so if market goes up volatility will come down and will lose money.
i am planning for july straddle because AAPL might go up or down another $20 bucks from here
or just wait for VOL to come down a little
ty
i am planning to go for AAPL but volatility is 67 %. end of april APPL vol was 40 %.
so if market goes up volatility will come down and will lose money.
i am planning for july straddle because AAPL might go up or down another $20 bucks from here
or just wait for VOL to come down a little
ty
IMO it depends on where you see volatility from here on out. Some may argue that it is already high some may say its going higher. VIX is above 40 right now. Back in Oct, Nov, Dec '09 we were up in the 80's.
Just out of curiosity, when you decide to make a play on AAPL or any other stock for that matter, do you have a directional outlook on the market in general too? How does the S&P500 effect your decision making?
good luck -Ray
You only have 5k right.. well the two things you need to worry about is
- options ITM by 0,01 or more get asigned automatic by expiration
-options buy and sell in one day counts at daytrade. You cant make more then 4 daytrades in a span of 5 trading days or you get the 90 days freeze.
- options ITM by 0,01 or more get asigned automatic by expiration
-options buy and sell in one day counts at daytrade. You cant make more then 4 daytrades in a span of 5 trading days or you get the 90 days freeze.
Kinda off topic here but wanted to ask... I was looking at the CBOE Daily Market Statistics and it read:
Total Put/Call Ratio 1.32
Index Put/Call Ratio 1.90
Equity Put/Call Ratio 0.88
CBOE Volatility Index (VIX) Put/Call Ratio 0.90
What does that mean to you? In the first line does it mean that there were 1.32 Puts for every call? If in fact there is a buyer for every seller than what is the point in knowing this. If there were more puts traded wouldn't there still be a buyer for every seller?
Wouldn't it mean more if say there were more Put sellers than Put buyers bidding the price of the Put down?
Total Put/Call Ratio 1.32
Index Put/Call Ratio 1.90
Equity Put/Call Ratio 0.88
CBOE Volatility Index (VIX) Put/Call Ratio 0.90
What does that mean to you? In the first line does it mean that there were 1.32 Puts for every call? If in fact there is a buyer for every seller than what is the point in knowing this. If there were more puts traded wouldn't there still be a buyer for every seller?
Wouldn't it mean more if say there were more Put sellers than Put buyers bidding the price of the Put down?
mynd66,
Yes, the 1.32 means there is 1.32 puts traded for each call The put/call ratio is viewed as a sentiment indicator - when the put/call ratio gets high, that means in theory there is alot of put buying and nerviousness about the market - when it gets extreme it can be looked at as a possible market rebound point.
The idea is that the market makers are there to sell puts (and calls), so there will be put sellers for any buyers that come in - however the price might very well rise (IV going up) if demand is high enough. If people are really nervous about the market and some also maybe hope to profit from a down-turn, puts get bought up more then calls do, even if the prices get higher. Of course from a "contrarian" point of view, the idea is that the public is usually wrong and just when the public starts loading up on puts, the market will rally.
For individual stocks, if people are betting on a bad earnings or a failed product, the puts might get bought up. On the other hand, if earnings are supposed to be good or some good news expected, the calls might get bought up. This can still be looked at in a "contrarian" way maybe, but maybe not as much as there might be an insider or someone (Even if they acting illegally) who knows what is going on and buying the correct options.
I hope I explained what I think at least good enough - if there is bearish sentiment there will be more puts bought compared to normal - you are right that there are sellers of those puts, but in many cases that can be market makers whose job is to take trades and then hedge the trades they take. The point is that the general public buys more puts then calls when they get nervous (and often in a more extreme way just before a large reversal).
JJacksET4
Yes, the 1.32 means there is 1.32 puts traded for each call The put/call ratio is viewed as a sentiment indicator - when the put/call ratio gets high, that means in theory there is alot of put buying and nerviousness about the market - when it gets extreme it can be looked at as a possible market rebound point.
The idea is that the market makers are there to sell puts (and calls), so there will be put sellers for any buyers that come in - however the price might very well rise (IV going up) if demand is high enough. If people are really nervous about the market and some also maybe hope to profit from a down-turn, puts get bought up more then calls do, even if the prices get higher. Of course from a "contrarian" point of view, the idea is that the public is usually wrong and just when the public starts loading up on puts, the market will rally.
For individual stocks, if people are betting on a bad earnings or a failed product, the puts might get bought up. On the other hand, if earnings are supposed to be good or some good news expected, the calls might get bought up. This can still be looked at in a "contrarian" way maybe, but maybe not as much as there might be an insider or someone (Even if they acting illegally) who knows what is going on and buying the correct options.
I hope I explained what I think at least good enough - if there is bearish sentiment there will be more puts bought compared to normal - you are right that there are sellers of those puts, but in many cases that can be market makers whose job is to take trades and then hedge the trades they take. The point is that the general public buys more puts then calls when they get nervous (and often in a more extreme way just before a large reversal).
JJacksET4
Wow thanks for taking the time to write that. So how does the market maker hedge against all of the puts he may sell? Does he just short the stock so as to be delta neutral? I mean is it common that even after the puts increase in price due to heavy buying that there won't be any sellers attracted to and willing to cash out at higher prices?
I sense a lack of recompense. You really taught me a good deal in this thread, can I come and cut your grass / trim the hedges or something?
I think you are correct that they hedge with stock and also use market futures, etc. however quite honestly I am not a real good one to ask about market maker operations, as I really don't worry too much about it and have never studied it in depth. There are others on this board who know a ton more in this area then I ever will. All I care is that they do their job - I don't worry about the details.
My HOA might not like that too much
lolIn all seriousness though, answering some questions just helps to keep a person sharp - plus if I say something wrong, someone else might point it out and I might learn something that I didn't know as well. In options trading it's hard to ever know it all.
JJacksET4