Basically, Don, I'm run my analysis on the stock and if it looks like there is going to be a big turn in the stock I play the options instead of common stock because there is more bang for the buck--easy as that.
Volatility trading
- Thread starter drukes1234
- Start date
Bought some GENZ here at 1.54
drukes: Perhaps when you have a moment, you could read this powerpoint slide presentation: Trading Volatility as an Asset (Talk at the GAIM Conference, Geneva, June 2003) It's a .pdf from Emanual Derman, a Columbia finance prof who used to run Goldman Sach's Global Bond Arbitrage Desk, among other things....
...ignore the math and just focus on the message....
...it may explain some of the confusion re: the title of this thread v. its contents...!
Yes, and this is the point I was trying to make in my earlier post. This paper is pretty good...except that disagree a bit with the Implied volatility negating the Black Scholes modeling. We have always used historical/local volatility in valuations, while the actual trading prices of options skew to the implied (obviously).
The simple way to look at this is "Where they're trading" (Implied)vs. "Where we think they should be trading." (Our estimated volatility).
Anyway, I certainly don't want to discourage posting, especially when there is some value added.
Don
My new years wish would be for some of you guys to actually start a volatility trading thread...no offense to the author of this thread who is basically trading stocks (straight calls/puts)....
Then get a life and move on to the next threat--you guys have too much time on your hands
Thats a great Freudian slip
Sold half of my GENR as the common stock is up 10% on the day
Still holding half of my GENR position BTW