Anyway, back to the topic on hand. Don't worry about it. Everyone has a crazy Worldco story. The weird thing about that place is it was littered with MBA's and law school grads and engineers like that was something special. Some of the best traders there were just regular Joe's off the street. The Fielder's were actually accountants by trade. I met a lot of good traders there though. The owners were corrupt as hell of course.
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Writing options for a living
- Thread starter torontoman
- Start date
Anyway, back to the topic on hand. Don't worry about it. Everyone has a crazy Worldco story. The weird thing about that place is it was littered with MBA's and law school grads and engineers like that was something special. Some of the best traders there were just regular Joe's off the street. The Fielder's were actually accountants by trade. I met a lot of good traders there though. The owners were corrupt as hell of course.
Quote from Trend Fader:
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??
Depends. What you are referring to is the volty smile. If you buy an ATM call and the stock goes up, your call will actually go up the smile. It will trade synthetically with the same strike OTM put. Generally buying OTM calls is not good. As the stock increases and the call goes ATM, the volty usually hits the bottom of the smile. If you buy calls, its best to buy ATM calls if you are volty sensitive.
Risk, in all that IV historical data you have, very interesting. Are you saying there is more decay on average on Thursdays or is premium decay consistent all things remaining equal except for a slight acceleration as expiration closes in? Anyone else, feel free to chime in.
Some believe there is time decay over the weekend, others think the weekends are skipped over so to speak.
Some believe there is time decay over the weekend, others think the weekends are skipped over so to speak.
Quote from Prevail:
Risk, in all that IV historical data you have, very interesting. Are you saying there is more decay on average on Thursdays or is premium decay consistent all things remaining equal except for a slight acceleration as expiration closes in? Anyone else, feel free to chime in.
Some believe there is time decay over the weekend, others think the weekends are skipped over so to speak.
Empirically it's not discrete as models would suggest. Thursday > Friday and Monday morning sees the biggest drop once the opening rotation is over.
Quote from Anseld:
all i asked was how the market was treating him, and then i told him he didn't really need to answer because it's kinda obvious, and then he just exploded. and he went into this psychotic rage.
i guess asking maverick how he's doing is like asking a fat girl how much she weighs.
Anseld, Mav is one of the few posters on ET who adds true value to these options threads. Please back Off as it would suck to loose his and others ( riskarb ) discussions on off- flor MM's stratagies in todays ever changing options world. Give us all a break and let- it - be.
To Mav and Risk, thanks for the keen insight.
Quote from Nordic:
Anseld, Mav is one of the few posters on ET who adds true value to these options threads. Please back Off as it would suck to loose his and others ( riskarb ) discussions on off- flor MM's stratagies in todays ever changing options world. Give us all a break and let- it - be.
To Mav and Risk, thanks for the keen insight.
I agree with Nordic. Even if you don't agree with Mav or Risk, you gotta admit, they make you think. They may also prevent you from entering a losing trade. That's my experience.
Quote from Maverick74:
Depends. What you are referring to is the volty smile. If you buy an ATM call and the stock goes up, your call will actually go up the smile. It will trade synthetically with the same strike OTM put. Generally buying OTM calls is not good. As the stock increases and the call goes ATM, the volty usually hits the bottom of the smile. If you buy calls, its best to buy ATM calls if you are volty sensitive.
Does this mean that in general terms.. if a stock breaks up and you are long call or stock breaks down and you are long put.. it should be pretty much equal option % appreciation assuming they are both ATM?
Because I figured that if a stock breaks up on a thrust the IV of the call would go down.. thus decreasing the value of the call option.
Quote from Nordic:
Anseld, Mav is one of the few posters on ET who adds true value to these options threads. Please back Off as it would suck to loose his and others ( riskarb ) discussions on off- flor MM's stratagies in todays ever changing options world. Give us all a break and let- it - be.
what value are you talking about? i think he's damaging you newbies more than helping because he's presenting a very narrow view of options. every time he posts, i actually know what he knows, but i also know what he knows could be wrong. he's a bit stuck with theoretical textbook learnings that he received when he first started trading, and that's fine because we've all learned that shit before, but i don't think he's at the level where he realizes that those theoretical assumptions are just theories but many times not very applicable nor that practical in the real world. if he understood that, he'd be more open-minded to evolve and adapt to market environments instead of forcefully imposing his rigid ideas on how the market must behave every time. a very critical characteristic for a successful trader is flexibility and the ability to adapt. you can't be stubborn. and you can't be stuck with assumptions, especially if those assumptions aren't helping you make money. if you've received any kind of education, that's good but you never want to limit yourself to accept only what you were initially taught because that will evidently limit your ability to ever think outside the box. and when you perceive generalizations as given laws, that's really going to get you in trouble in trading.
i'll give you an example. mav keeps on preaching that the options markets are priced efficiently everytime everywhere, and all expectations and future expectations have already been priced in accordingly.
i'm sorry, but that has got to be the most ridiculous thing i've ever heard from a supposedly 9-year options veteran.
there are so many inefficiencies in the market and in implied volatility itself. not everything is a perfect smile nor frown. not all deltas accurately represent the 'probability' of the derivative being in-the-money, so to speak. to enter a full discussion about that is beyond the scope of this thread. i have an entire system that practically takes advantage of inefficiently priced options. there are so many elements in the structure of options pricing, and they are just not always perfect.
when you're an option trader, you sell options that you think are expensive and buy cheap options that you think have value. and if you do it many times, over the long run, you win. the details go a lot deeper than that, but the basic concept is not that hard to digest. not all options are priced perfectly.
mav has a hard time believing this. well, just because he hasn't figured out where to look yet, it doesn't mean it's hard for everyone else to see the inefficiencies.
so what real value to the options board from mav are you talking about? that he can teach you about the concept of collecting interest when you short stock or how you can convert a put into a synthetic call? sorry to tell you, but that's really just basic stuff that any exchange floor clerk should know. maybe i'm just not that new to options to find him to be resourceful to me.
when he starts talking about the deep world of volatility of options, i'll probably find him more fascinating, but i doubt he does because he thinks everything is priced efficiently already.
*shrugs*
Quote from Anseld:
when you're an option trader, you sell options that you think are expensive and buy cheap options that you think have value. and if you do it many times, over the long run, you win. the concept is not that hard to digest. not all options are priced perfectly.
This is nonsense to me !!!
Trade the underlying and forget the math !!!
So I disagree with both you guys.....
Maverick - I know that execution edges exist!!!
Anseld - I get where your trying to go too but there is no need to slander Maverick, he has a method that works for him and that's fine for him.
We all know that the markets are complex so who cares if I make money "this way" and you make money "that way".
Call it a trues guys it's getting silly now.