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Freddie Pablo
I was wondering if you could help with a few
beginner type questions?
I just became interested in Options and was
thinking of using it as a hedge as well as short term.
I am hearing rumors from many different areas that
the bottom will be in 2006. One chart actually mentions Dec 26 2006 and a 50%
drop from here. I though a simple put on the DOW and NASDAQ would act like a
good hedge for my long positions. Using 5k as an example for two PUTS
leaps. First terminology. How would you state that. Buy a.... contract on the
???
For a PUT on the DOW does drop 50% I would be
up how much? Obviously if I am wrong it is all gone.
I suppose if felt really strongly about this I
could by Call options on Gold
I was following ticker (VESA )
UESQD.X PUTS late last week and noticed it is now at 1.90 up from
1.60. If one was used to taking 10k positions on a stock could one now take 2k
positions. If so I would assume the most would lose is 2k if it
expired.
BTW I am back to using point and figure charts.
Regards Martin
<BLOCKQUOTE
>
----- Original Message -----
<DIV
>From:
Freddie
Ng
To: <A
title=Metastockusers@xxxxxxxxxxxxxxx
href="">Metastockusers@xxxxxxxxxxxxxxx
Sent: April 08, 2003 12:18 AM
Subject: Re: [Metastockusers] Stock
Option
Pablo,Thanks for the advise for buy/sell on volatility.
You are right, the IV high-low must have a base for reference, otherwise it is
meaningless. If we can have a historical volatility of the option IV,
that should serve our purpose, right ?. Apply IV/HV will then yield the ratio,
if ratio <1, buy and if ratio is >1 sell. Is this what you use ?
Thanks for the Meta HV formula, on comparison, I realize I had it
programmed in my indicator already. It was kind of you to point out that HV is
for stock and not on option. I would have taken it for option.The IV
indicator you mentioned is referring to the "option volatility" in the
indicator drop down menu ?As for the Greeks, as an example, say you
bought a call, its price will rise dollar for dollar with the stock if delta
is 1, if the delta is near to zero, even if the stock gap up, you would not
see any up price in option. Such position should be disposed asap. Delta of
0.5 has the max time value with no intrinsic value. If trade is against your
direction, for every dollar of stock decline, option will fall by 50cts.
Direction is abstract if we can forecast direction accurately, buy simple call
and put will be neat, forget about other complex strategies in options. Then
we will enjoy the leverage in options, less outlay and high % return. However,
volatility could override greeks.Best RegardsFreddie Ng
At 11:54 PM 4/7/2003 -0300, you wrote:
I
actually didnt mention specific options soft on account your request was
related to metastock capabilities and use for options, the best options soft
is optionvue, or you can use the web service of <A
href="">www.optionetics.com.<FONT
face=arial size=2>there is other site like <A
href="">www.IVolatility.com<FONT
face=arial size=2>forget about the greeks in my experience they dont add
anything crucial to your trading, but volatility is crucial, this was the
reason i used the ip/hv ratio when i was still investing in options in the
american marketmostly you must buy low
volatility and sell (or write) high volatility, but the problem is high or
low comparing to what, so i started to use the ratio to spot it fast, i dont
have the exact code for the ratio with me, but you can find the iv indicator
on metastock quick indicator list and for the hv i usethis
formula: <FONT face=arial
size=2>Std(Log(C/Ref(C,-1)),10)/Std(Log(C/Ref(C,-1)),100) <FONT
face=arial size=2>make notice that while the implied is calculated based on
the option price the hv is calculated on the
underlying. about the
group/industry ranked by their
volatility, you can find in the sites mentioned by me and debra that
infomation i never used it but
optionetics is very much discussed and recommended inoptions boards and
usenet groups, but as a rule you should check the cboe
site Bye
----- Original Message -----
From: Freddie Ng
To: <A
href="">Metastockusers@xxxxxxxxxxxxxxx
Sent: Sunday, April 06, 2003 10:13 PM
Subject: Re: [Metastockusers] Stock Option
Pablo,
Appreciate your valuable systematic explanation. Those points that you
discussed were very important in option trading. If it can determine or
anticipate the correct underlying direction, this info can then be used to
interpret the option direction. Call follows underlying while Put is
reverse. I also understand that not all indicators are suitable for each
stock and Metastock can search and match the best indicator to optimized
profit, I wonder if I had missed out anything in Metastock for
option.
Volatility(implied and Historical)
Keen to know how you use these info to analyze the option. I am aware
that one can lost trade due to volatility. You mentioned about use ratio
of IV & HV, can you elaborate a little bit more. The option volatility
indicator is for IV, how do you obtain HV in Metastock.
Btw, do you have any good source where I can obtain the volatility
info. Is there any such listing of group/industry ranked by their
volatility.
Best Regards
Freddie Ng
At 04:07 AM 4/5/2003 -0300, you wrote:
Freddie,
on using metastock for options you have 2 problems
1 Data problem
2 analysis problem
1 since options trade for a short period, the problem arises, you
cannot
make any analysis for a while, there is 2 ways around it :
continuos
contracts (i tried them for a while , but they are not reliable in
my
opnion), the alternative is using intraday data, so even if you can
make
analysis on daily charts for a while, at least you can run intraday
an.
2 about the analysis:
you must keep an eye on the stock or whatever the option is for
then you can analyze the option itself by common tech an. tools
then you have to keep an eye on implied volaitity and hystorical
volatility,
for while i used a ratio between the implied volatility and
hystorical
volatility
check the quick drop indicator youll find some options
indicators
Pablo
----- Original Message -----
From: "freddie_ng" <n07476@xxxxxxxxxxxxxx>
To: <Metastockusers@xxxxxxxxxxxxxxx>
Sent: Saturday, April 05, 2003 2:00 AM
Subject: [Metastockusers] Stock Option
> Hi all Metastock experts,
>
> Can anyone enlighten me how to make use of Metastock to trade
on
> options. I own a Metastock ver 8.0, just recently upgraded from
v7.2.
>
> Best Regards
> Freddie Ng
>
>
>
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