|
PureBytes Links
Trading Reference Links
|
A couple concerns with your friend's claim....
Almost no one uses sheets anymore.......systems are all pretty much
real-time.
Over the last few years actual volatility has generally exceeded implied
volatility which means it was, in fact, easy to buy undervalued options,
and if you did it continually for the last few few years the rate of
return would have been incredible.
However the same technique would have killed you from the unhedged sell
side. Implied volatility as a factor in determining actual volatility is
wrong as often as it is correct and historical volatility has been totally
discredited as a factor in estimating future volatility in the recent
market.
Tim and Lynn Lee wrote:
> -
>
> About 10 years ago I met someone I thought would make an excellent
> trader. I invited him to the exchange and he proceeded to go about
> learning the trading business.
>
> Needless to say, he is now the most successful trader I know. He is a
> pure options trader. I am attempting to find out what it is he does
> so well but my I am unsure what questions to ask him.
>
> I was talking to him recently and he told me he does not use any
> technical indicators whatsoever, he buys underpriced options and
> sells overpriced options.
>
> He told me that the exchange operates on the laws of supply and demand
> if their is a demand for options volatility will rise if there is no
> demand volatility will fall.
>
> He also told me that the options locals cannot adjust their sheets
> fast enough to prevent him from exploiting the fact that the "real
> volatility" of the option might be different from what their sheets
> say it is. He tells me they are often a day late in reacting to what
> the volatility really is.
>
> So, the question is what should I be asking him to figure out how to
> trade options better, any ideas?
|