|
PureBytes Links
Trading Reference Links
|
>I've been thinking about ways to limit the risk and drawdowns of Oddball and
>its variations, and I began to consider the use of OEX options. I am
>wondering if someone who knows can correct my thinking if I am wrong?
I've thought the same thing. However, the key point you're missing is
this:
> One in the money OEX option should return roughly the same point
>value as 1 mini SnP (no?),
No.
Option delta. That's the sensitivity of an options price compared
to the underlying price. Option delta is always less than 1. It
approaches 1 as the option nears expiration, or as the option
goes deeper in the money. A super deep ITM option wil cost a lot
(perhaps as much as the margin on a futures contract) and if it
has a delta near 1.0, your risk is about the same as if you traded
the straight contract. Worse in fact, because it's hard to stop
out of options. Many brokers won't touch an option stop order, in
my experience, or if they do the order is "not held" meaning the
broker is not held for the responsibility of filling it if it can be
filled.
>PS can someone tell me when OEX options expire?
LTD for options is third friday of the month.
--
,|___ Alex Matulich -- alex@xxxxxxxxxxxxxx
// +__> Director of Research and Development
// \
//___) Unicorn Research Corporation -- http://unicorn.us.com
|