The JEM T/A Report Week 1.

I am knocking off the rust with real money. I am trading about a third of the size of what I did 10 years ago.



Quote from ammo:

i hope you move to sim trading soon,markets change fast and even if they hadn't,you still need to knock off the rust and put a little oil on the chain,air up the tires, before you try to ride the bike further than the corner store
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pulling for you jem,but the computers you're trading against weren't there ten years ago, the turns are much faster and the costs higher when wrong ,be nimble
 
just about back to even. My account is only about 200 dollars from where I started. I lost about 200 daytrading today but I had some facebook and pepsi options which got crushed today.

I got rid of the pepsi and some of the facebook. Still have 5 calls.


Question?


I have a question... why does it seems like calls which are one strike in the model underperform on the way up.. (per their delta at the time of the trade)... but seem to over perform the delta if you stocks goes down.

I know the premium might get sucked out a bit on the upside... but I do not understand what is going on on the down side.

do the option markets just over react on the downside? I would have thought they were more efficient that that.
 
Quote from jem:

I have a question... why does it seems like calls which are one strike in the model underperform on the way up.. (per their delta at the time of the trade)... but seem to over perform the delta if you stocks goes down.

I know the premium might get sucked out a bit on the upside... but I do not understand what is going on on the down side.

do the option markets just over react on the downside? I would have thought they were more efficient that that.
More...

It might be due to changes in the implied volatility of your long calls. As being long an option you are long vega, you will be helped if IV increases and hurt if it decreases. As the stock is moving up, the IV of your (otm?) calls may be dropping, and as the stock moves down IV may be increasing. Don't forget also that your delta is constantly changing (gamma).
 
Thanks... you are probably right. I tend to buy options when I have nice profits. When I have nice profits we typically have an unusual price move that I was anticipating.

In the past I followed the delta I need to spend more time with vega.






Quote from noregrets:

It might be due to changes in the implied volatility of your long calls. As being long an option you are long vega, you will be helped if IV increases and hurt if it decreases. As the stock is moving up, the IV of your (otm?) calls may be dropping, and as the stock moves down IV may be increasing. Don't forget also that your delta is constantly changing (gamma).
More...
 
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