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Kent/ Traders,
I have successfully traded the 10/90 vol at 50% or less. Actually have it
programmed on our website at http://optionetics.com under the platinum site.
If your not registered, just sign up for a free trial and go to the section
called my rank list. From there, simply insert the 10/90SV in the proper
boxes and click on "Quiet". A list of the lowest vol to vol stocks, ranked
from low to high ratio volatility stocks will appear.
When you run the scan, realize that the stocks with ratios of .05 .10, etc.
are probably takeovers and the stock price has died. So its a good idea to
look at the charts of the stocks you rank. I usually rank the top 500 by
volume as to filter out the fantasy stocks (you know, the ones that look too
good to be true).
Its also a good idea to cull over the options that are very expensive in
premium. Right now, I would say that over half of the optionables trading
are in the bottom 20% of their historical implied range from the last 2
years. Thats incredible when heading into October. I have found that over
the long haul, about 70 percent of these consolidation patterns lead to
decent breakouts. 50% of them make a move in the first week of
consolidation. The rest I am finding take about 30 days to work out. Its
what you do with the options that make you a winner or a loser.
My partner George Fontanills and I are writing a book on volatility with
real life examples, and practical applications for use in volatility highs
and lows, seasonal volatility, volatilty skews, skews by strike, skews by
month, skews by arbitrage, etc. Remember I am not a book writer, but a
trader on the subject, but maybe that might not be such a bad thing.
Tom Gentile
Chief Options Strategist
Optionetics.com
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