|
PureBytes Links
Trading Reference Links
|
<x-html><!doctype html public "-//w3c//dtd html 4.0 transitional//en">
<html>
<b>Answers in bold</b>
<p>Gary Fritz wrote:
<blockquote TYPE=CITE>Warning, many naive questions ahead. :-)
I've never learned my way
<br>around options very well, particularly futures options. I (and
I'd
<br>bet many others) would appreciate it a LOT if you options wizards
<br>would fill in a few details beyond the "options are good" level.
<p>Ira wrote:
<br>> If you are using options as a stop you don't need to be delta
<br>> aware. You just have to define the risk. If the call/put is at the
<br>> money it is the cost of the option plus or minus the amount above
<br>> or below the strike price. Deltas are only applicable if you
<br>> intend to trade the options and the futures in a specific strategy.
<p>But... How do you know how many options to buy?
<p>For example, I assumed you would need to know the delta to know how
<br>many options it takes to offset your futures position.</blockquote>
<b>Not for protection or to use instead of a stop.</b>
<blockquote TYPE=CITE>The delta is
<br>the amount the option will change per 1 point of the underlying,
<br>right? So if the delta is 0.5, it would take 2 options to exactly
<br>balance each future, correct?</blockquote>
<b>That is correct, but you are not looking to establish a delta neutral
position you are only looking for protection. A delta neutral position
is usually a volatility play.</b>
<blockquote TYPE=CITE>Or do you just wet-finger it, or ...?
<br>How do you figure the profit/loss on the future/option spread given
a
<br>particular price change over a particular period of time?
<br><b>The easiest way to explain it is to use stock, because the numbers
are simpler in an explanation. If a stock is trading at 32 and you
want to go long and use a put as a hedge, your decision is what put to
buy and what risk to take. If you buy the 30 put for 1 1/2,
then you total risk, 0 to infinity, is the $150 for the put and the $200
which the stock is above the strike price. Therefore your total
risk is $350 and it occurs at the strike price or lower, at expiration.</b>
<br>Do you pay attention to theta to get an idea for the daily cost of
<br>the option?
<br><b>Theta changes with time and accelerates as you approach expiration.
I just take the total premium payed and divide by the number of days to
expiration. That will give me a guide. The greatest risk is
not theta, but volatiliy. If the Implied Volatility of the options
is far greater then the volatility of the underlying, you have a volatility
risk that can be measured.</b>
<br>To protect your position, do you buy at-the-money, or out-of-the-
<br>money, and why?
<br><b>Money management will dictate which one you will buy.
How big a stop did you intend to use? then look at the alternatives that
would give you same risk result.</b>
<br>How do you know what is a good price for an option? Do you figure
<br>the fair value using Black-Scholes, or what?
<br><b>Yes. For American style options. Cox for European and index options.</b>
<br>Are there any good online tutorials to get one's feet wet in this?
I
<br>tried looking on the CBOE site and searched several search engines
<br>but couldn't find anything useful. If no online sources, what
is a
<br>good book?
<br><b>Most books are a bunch of fluff or misleading, because they are
written by academics and not traders. I believe Shell Nathenson?
I think that is his name, has written an excellent book on options.
Ask the DR. He has the name and the title of the book.</b>
<br>What about a good site for current option data, e.g. prices, greeks,
<br>etc? There used to be a good site at http://cboe.pcquote.com/cgi-
<br>bin/cboeopt.exe but it seems to be down now -- maybe a temporary
<br>problem. But of course it's 20 mins delayed, so you couldn't
use
<br>that for realtime trading. (Or could you? Could you use
the 20-min-
<br>old options data, along with knowledge of the current price of the
<br>underlying, to determine the current "right" values for the option?)
<br><b>For stocks, www.cboe.com, for stocks and futures, www.optionsanalysis.com
and there is www.pmpublishing.com. If you have a spread sheet with
the value of the options at various prices, what difference does it make
if you have up to the minute option data feed? If you know the price
of the underlying, you call up and ask for the market on the option.
You can put in a price for the combination in some pits and in some stocks.
In the above example you could bid $33.50 for the stock and a 30 put.
You don't care what prices either is executed at as long as the total is
$33.50.</b>
<br>For those of us on TradeStation, how do you track all those option
<br>symbols? Or is is it impractical to use TS with options?
<br><b>I don't use trade station so I can't tell you. Ensign has
an excellent options capability.</b>
<br>There, that should start some discussion.... :-)
<br><b>Best of luck, Ira.</b>
<br>Thanks,
<br>Gary</blockquote>
</html>
</x-html>From ???@??? Wed Jun 23 13:01:11 1999
Return-Path: <owner-realtraders@xxxxxxxxxxxx>
Received: from ml.nw.verio.net (ml.nw.verio.net [204.202.220.47])
by purebytes.com (8.8.7/8.8.7) with ESMTP id MAA15851
for <neal@xxxxxxxxxxxxx>; Wed, 23 Jun 1999 12:57:53 -0700
Received: (from majordom@xxxxxxxxx)
by ml.nw.verio.net (970819888) id LAA12452
for realtraders-sendemout; Wed, 23 Jun 1999 11:18:25 -0700 (PDT)
Received: from mail1.nwnet.net (mail1.nwnet.net [192.220.251.8])
by ml.nw.verio.net (970819888) with ESMTP id LAA12448
for <realtraders@xxxxxxxxxxxxxxx>; Wed, 23 Jun 1999 11:18:22 -0700 (PDT)
Received: from fh101.infi.net (fh101.infi.net [208.131.160.100])
by mail1.nwnet.net (970819888) with ESMTP id LAA26224
for <realtraders@xxxxxxxxxxxx>; Wed, 23 Jun 1999 11:18:19 -0700 (PDT)
Received: from naples.infi.net (pm2-104.apf.infi.net [208.143.133.104])
by fh101.infi.net (8.8.8/8.8.8) with ESMTP id OAA17536;
Wed, 23 Jun 1999 14:18:06 -0400 (EDT)
Message-ID: <37714F26.DE018840@xxxxxxxxxxxxxxx>
Date: Wed, 23 Jun 1999 14:18:31 -0700
From: nwinski <nwinski@xxxxxxxxxxxxxxx>
Reply-To: nwinski@xxxxxxxxxxxxxxx
Organization: InfiNet
X-Mailer: Mozilla 4.08 [en] (Win16; I)
MIME-Version: 1.0
To: swp@xxxxxxxxxx
CC: bshumake <bshumake@xxxxxxxxxxxx>, Tim Eby <teby@xxxxxxxxxx>,
RealTraders <realtraders@xxxxxxxxxxxx>
Subject: Re: Free Speech Rules !!!
References: <001901bebd94$915f3d60$926840ce@xxxxxxxxxx> <3770CFD0.6681A263@xxxxxxxxxx>
Content-Type: text/plain; charset=us-ascii
Content-Transfer-Encoding: 7bit
Sender: owner-realtraders@xxxxxxxxxxxx
Precedence: bulk
Status:
swp wrote:
> While I am always happy to have less government regulation, I really do
> not understand the ruling. I 100% agree that regulation of computer
> programs is bogus. Same goes for portal sites or forums. But, just
> because I sell my newsletter over the internet instead of by mail or fax
> should not eliminate me from regulation. That is just plain stupid. If
> what you do should be regulated off the internet, it should be regulated
> on the internet! This goes for paid advice obviously. Free advice, if it
> is not tied to required commodity business of some other type, should
> not be regulated, be it on or off the internet.
>
> Steve Poser,
Read the ruling again! It is presented in such a way as to give one
the impression you got, but
hidden in the first paragraph is a phrase that makes all newsletters
regardless of medium included in the ruling. At least, that was my
interpretation when I read it. Hello, hello, is there a lawyer in the
house? <G>
Legally,
Norman
>
> --
> Steven W. Poser, President
> Poser Global Market Strategies Inc.
> http://www.poserglobal.com
>
> Tel: 201-995-0845
> Fax: 201-995-0846
> Email: swp@xxxxxxxxxxxxxxx
>
> > bshumake wrote:
> >
> > Yeeeeeaaaaah!!!! The CFTC gets their ass KICKED by the Institute for
> > Justice attorneys !!!
> > We no longer need big brother's permission ( and pay him annual fees )
> > to express an opinion about the futures market, recommend trades,
> > create software or web-sites, etc. You can read the complete 28 page
> > judgement at the attached link. Thank-you to the Institute for
> > Justice, and to all the plaintiffs ( Frank Taucher,Stephen Briese,
> > Fred Kastead, and Robert Miner ) who challenged those who sought to
> > destroy our first amendment rights!! The world is a better place
> > because of you.
> >
> > All the Best!
> > Bill Shumake
> >
> >
|