i guess that's what makes markets in the first place. likewise, thanks for your participation in the dialogue.
Writing options for a living
- Thread starter torontoman
- Start date
i guess that's what makes markets in the first place. likewise, thanks for your participation in the dialogue.
but you have no way of knowing if there is a skew because some fund manager is protecting portfolio gains (and his job) or if some knowledgeable source is correctly detecting fundamental problems with the underlying and is correctly anticipating an impending sell-off. for all intents and purposes you have to assume that prices are efficient.
if prices were not efficient, then there would surely be an entity that consistently profited from always selling skewed puts. and again, if this were the case, their market actions would drive the skew back to fair value.
lol at Adam mentioning HBS and Wharton MBAs. As if his firm is even on their radar screens.
What I got from the article - and from the 2004 ET thread on Adam ( http://www.elitetrader.com/vb/showthread.php?s=&threadid=42143&highlight=wasserman ) - is that the guy is a salesman and making mucho commissions off of his "traders."
Yeah I have serious issues with the guy. He did make mucho money off commisons and I find his ethics to be quite questionable. I'm not going to defend his actions or what he did. That's not my job to do so. It's one of the reasons I left. But as a trader, as much as I might not like the way he conducted his business, I have to admit as a daytrader, he was second to none. Not saying that out there somewhere a better trader did not exist. I just never met them. As far as consistency goes, the guy was solid as a rock.
Anyway, just to tie this back in and keep this post on topic, the reason I brought his name up in the first place was to explain to guys that Adam was wrong more then he was right and the guy still made money every day. He didn't enter trades with a positive expectancy. Someone asked why would a trader enter such a trade. Well, obviously, traders enter trades because of what they think or perceive to be good trades. We only know if they are good trades after the fact. However, despite this shortcoming, a good trader can manage his risk and turn a bad trade into a good one. He is an excellent example of someone who can do that.
Hello,
It all depends what you consider efficient. If everybody utility value was just pure monetary gain than the expected gain from option is zero. You are right of course you donât have good indicator where the bulk of the hedging is.
It all depends how you are using options. For example if one side is having 90%(this is completely arbitrary , actual number may be different) in quality bonds and rest in S&P calls then his performance may slightly underperformed long term S&P returns but with much less volatility( maximum drawdown ~4-5%, provided the bonds do no default ). On the other hand the dude that was selling those calls made some profit. The sum of their utility functions maxed out.
If everybody is speculator in options then the only way to profit is to actually have superior forecasting ability of the underlying.
There have been studies on the futures market. It showed that buyer of futures (fully collateralized in T-Bills) have roughly ~10% annual return. This is possible because the hedgers are willing to pay the premium so they can have stable budget planning, cash flows and whatnot.
Hey bro, watch out. Baron has a policy against publishing PM's. I don't care though. I sent you about 5 of them. Feel free to post them all. If you want to keep degrading this thread. Go ahead. Eventually enough people will ask you to leave and you'll go away. Until then, post all you want. I have nothing to hide. I just tried to take the trash talking to PM to keep this thread clean. Oh well, so much for that. I gave you my phone number too, didn't expect you to call. And of course you didn't.
Anyway, I suggest everyone just put Anseld on ignore and we'll get this thread back on topic. Sorry about this guys. If I had any idea this guy was so unstable, I never would have confronted him about selling premium over the weekend. My bad.
This guy is PMing every minute now. I told him I would not respond anymore to him so now he is bringing the trash talk back to this thread. Sorry about that. I can't control what he does, we'll just have to put him on ignore. I'm not going to communicate with him anymore.
Here is a question...
When stocks rise IV goes down. and vice versa when stocks decline IV increases... Assuming you are playing the front ATM option.. doesnt the option increase if volatility increases.. so isnt the buyer of a call at a disadvantage to the buyer of the put.. because if his stock goes up the volatility will go down??
When stocks rise IV goes down. and vice versa when stocks decline IV increases... Assuming you are playing the front ATM option.. doesnt the option increase if volatility increases.. so isnt the buyer of a call at a disadvantage to the buyer of the put.. because if his stock goes up the volatility will go down??