|
PureBytes Links
Trading Reference Links
|
Joe & fellow Rt's;
Forgive me for not being familiar with the market you are discussing, but
the principle is the same for all options. Firstly the put is probably
cheaper than the call because the market has a bullish bias. Option sellers
want more for options that will more likely go in the money.
The price of the put implies a belief that a one standard deviation move
for all price returns over the next 10 months will not be more than 2.35
ticks. The call is more expensive because option writers are pricing in
their beliefs about where the market will close. The call price also
reflects a liquidity concern in those options.
My question is why would you want to buy the straddle (puts and calls). If
you believe that the price of the future is going to explode in one
direction or another but you don't know which, AND that volatility will
rally with it, then this is a good trade. If you intend putting on this
trade to hold the options until expiry, you will need the market to be at
192.7 or 186.8 just to break even. If you have a strong bull or bear view
why not just do one half of the trade and halve your risk exposure while
improving your payoff?
You also don't mention why you would want to put this trade on and for what
time frame. TIME and timing are the 2nd most important aspect of options
trading(IMHO). Risk reward payoffs are the first.
When you figure out why you want this trade you'll know if it's a good one.
Good luck
Zaheer
|