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At 5:16 PM -0700 7/4/01, Jack Griffin wrote:
>As the risk of prolonging this thread I may as well
>raise a few points I think you guys could have missed:
>
>1: options scale off the vix. So they CAN roller
>coaster all over the place independently of the
>futures(time decay is way against long positions
>though). Think warnings season, etc.
Actually, the price of an option includes a term based upon the
historical volatility of that specific market. VIX is an index
computed by taking the weighted average of the implied volatilities
of eight OEX calls and puts with an average time to maturity of 30
days. The two measures of volatility tend to be correlated but do not
track exactly.
>2: Taxes. The trusts nail you with a normal gain if
>you make $$.
I don't know what you mean by "trusts" but assume you are referring
to some of the so-called "exchange trader funds" that attempt to
track the various indices. Index-option profits are taxed like
futures, I believe.
>3: the spreads and commissions on these options are so
>huge it is not even worth thinking about except on > 1
>day hold times.
But you can often buy/sell at some point within the spread.
Bob Fulks
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