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[Quoth the THE DOCTOR:]
>
> Just a brief observation....Option Volume at CBOE the last
> few days has been huge. Normally this would bring one to
> the conclusion that the expiration rolls were occurring this
> week. It has grown quite common to sell the rolls occur the
> week before expiration, especially in the last few years.
> That DOES NOT seem to be the case. These last few days the
> volume has included only modest index volume where the rolls
> would occur. Today's volume included almost 60,000 Leaps.
> This kind of activity seems to indicate more of a day trader
> mentality, especially given that the volume has not been
> accompanied by a significant rise in Open Interest.
>
> Put/Call ratios, which I'm a believer really are no longer a
> credible indicator, are also fairly ordinary.
>
> Conclusion: I'm not certain....I expect with nominal stock
> prices viewed by some to be so high that there is a greater
> use of ITMs as day trading instruments. Additionally the
> mix of retail/institutional business has tipped a bit more
> toward the institutional side over the past couple of day,
> but again the numbers are not dramatically out of line.
>
I think it has something to do with the explosion in prices well beyond
"conventional reasonable valuations" of Internet stocks like Amazon
(AMZN). You are probably right; people are daytrading these options
because their price swings are suitable for daytrading. But the
question, as always in technical analysis, is, "Are we talking smart
daytraders or stupid daytraders?"
--
znmeb@xxxxxxxxxxxx (M. Edward Borasky) http://www.teleport.com/~znmeb
If God had meant carrots to be eaten cooked, He would have given rabbits
fire.
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