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The percentage of options going off-line as closing trades has been a bit
higher month to date....this would allow one to conclude that a good portion
of these users have in fact been successful. Drawing a conclusion as to
"were they lucky or smart" is impossible. I'm anxious to see what
expiration week activity looks like. At this point if the market stays up I
would venture a very low percentage of options will go off worthless. At
the point I wouldn't be too surprised to see the number in the mid 20%
area...which would be a remarkably low value.
znmeb@xxxxxxxxxxxx wrote:
> [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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