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well put..........guess i better stick to my
competence level :)
thanks
--- EarlA <earl.a@xxxxxxxxxx> wrote:
> Rakesh,
>
> In a nutshell, no! One should understand the greeks
> in order to use options
> ... would you want your surgeon slicing and dicing
> on your body without an
> understanding of anatomy?
>
> Earl
>
> ----- Original Message -----
> From: "Rakesh Sahgal" <rakeshsahgal@xxxxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Friday, June 13, 2003 10:07 AM
> Subject: Re: [RT] TO OPTION OR NOT TO OPTION
>
>
> > Hi Earl,
> >
> > Could you please elaborate on the point you are
> > making? I have never traded options due to the
> complex
> > mnath involved in valuing them. Given this fact is
> it
> > possible for someone like me who doesnt comprehend
> the
> > greeks to use options gainfully as you are
> suggesting
> > they can be used?
> >
> > Rakesh
> >
> > --- EarlA <earl.a@xxxxxxxxxx> wrote:
> > > Very true, and I generally strongly share your
> > > preference for the simple
> > > binary decision in futures. That said, deep in
> the
> > > money options, which most
> > > traders eschew for lack of leverage, offer the
> > > opportunity to do a binary
> > > trade at potential trend reversal points where
> both
> > > volatility expansion and
> > > delta work for you.
> > >
> > > Earl
> > >
> > > ----- Original Message -----
> > > From: "Norman Winski" <nwinski@xxxxxxxxxxxxx>
> > > To: <realtraders@xxxxxxxxxxxxxxx>
> > > Sent: Thursday, June 12, 2003 10:07 AM
> > > Subject: [RT] TO OPTION OR NOT TO OPTION
> > >
> > >
> > > Dom1,
> > >
> > > I hope you don't mind my jumping in. My
> thinking
> > > is that the more
> > > variables there
> > > are, the more variables there are with which you
> > > have to compete or beat
> > > professionals at. Options are a good example of
> a
> > > sophisticated vehicle
> > > which begs for the best state of the art
> computer
> > > and mathematical models.
> > > I was a market maker on the CBOE for 12 years.
> I
> > > know enough to know that
> > > it is very difficult to compete with the floor
> > > professional in options,
> > > which is why I now seldom trade options in favor
> of
> > > the more simplistic
> > > futures contracts. Futures represent mostly a
> > > binary decision, will it go
> > > up or down, to buy or to sell, whereas options
> > > represent a plethora of
> > > variables and required decisions. The greater
> the
> > > number of variables, the
> > > greater the chance that I will make a bad
> decision
> > > or judgement. So, unless
> > > you have a staff of people to run the computers,
> do
> > > the research, and the
> > > latest option theoretical math model, you are
> > > probably gonna get your butt
> > > kicked. It is hard enough to make money in the
> > > market via getting the
> > > underlying market right without having to worry
> > > about illiquid options
> > > causing wide bid - asks, implied volatility, the
> > > history of option
> > > valuation, deltas, thetas and the rest of the
> Greek
> > > alphabet. Bottomline, I
> > > am a strong believer in KEEP IT SIMPLE and
> options
> > > don't fit my KEEP IT
> > > SIMPLE model. That's my two cents.
> > >
> > > Regards,
> > >
> > > Norman
> > >
> > > ----- Original Message -----
> > > From: dom1_1998
> > > To: realtraders@xxxxxxxxxxxxxxx
> > > Sent: Thursday, June 12, 2003 11:42 AM
> > > Subject: Re: [RT] Minimum price increment
> > >
> > >
> > > On one hand I agree about calculating option
> > > prices via the BS method.
> > > On the other hand I wonder how much of a
> > > difference does it really make.
> > >
> > > The MM decides the B/A prices so they're going
> to
> > > be what they are
> > > regardless of what the BS model says. Like
> you
> > > said, over price for
> > > you, under price for me.
> > >
> > > To avoid this guessing game, I wonder if the
> best
> > > method is buy/sell
> > > deltas of one to mesh with the underlying.
> > >
> > > What do you think?
> > >
> > > Dominick
> > >
> > >
> > >
> > >
> > >
> > >
> > >
> > >
> > >
> > > --- In realtraders@xxxxxxxxxxxxxxx, "Ira"
> > > <mr.ira@xxxx> wrote:
> > > > I hope that your system includes the
> theoretical
> > > price of the
> > > options and a realistic way of acquiring the
> > > numbers to be used in the
> > > variables in option pricing. Based upon your
> > > reply you are basing
> > > your bid/offer upon someone else's
> information,
> > > bid/offer. The
> > > greatest risk outside of price movement in
> trading
> > > options is
> > > volatility risk. So you had better have a
> handle
> > > on finding the
> > > volatility of the underlying and being able to
> > > compare it with the
> > > implied volatility of the options. To know
> > > whether the bids and
> > > offers are over or under valued is imperative
> in
> > > trading options. One
> > > thing to remember is that your overvalued
> options
> > > might be my under
> > > valued option. It is all in the numbers used
> in
> > > the option pricing
> > > variables. Good luck in your search. Ira.
> > > > ----- Original Message -----
> > > > From: Brendan B. Boerner
> > > > To: realtraders@xxxxxxxxxxxxxxx
> > > > Sent: Thursday, June 12, 2003 7:27 AM
> > > > Subject: RE: [RT] Minimum price increment
> > > >
> > > >
> > > > Ira, thanks for the explanation.
> > > >
> > > > I'm asking because I'm developing a system
> to
> > > remain on the inside
> > > bid / offer. I want to ensure that if I raise
> /
> > > lower the bid / offer
> > > that I do so in such a way the honors the minm
> > > price increment rules.
> > > >
> > > > Regards,
> > > > Brendan
> > > > -----Original Message-----
> > > > From: Ira [mailto:mr.ira@x...]
> > > > Sent: Thursday, June 12, 2003 9:10 AM
> > > > To: realtraders@xxxxxxxxxxxxxxx
> > > > Subject: Re: [RT] Minimum price
> increment
> > > >
> > > >
> > > > The minimum bid is for market makers
> > > standing in the crowd and
> > > has nothing to do with you, other then the
> > > increments of bid and
> > > offer. There is also a maximum spread between
> bid
> > > and offer that can
> > > be made in the crowd. If the bid is $3 then
> the
> > > minimum offer in the
> > > crowd, by a market maker is $3 and $3.10.
> That
> > > doesn't stop you from
> > > putting in an offer or bid at $3.00 or $3.10.
> If
> > > you put in your offer
> > > at $3.10 you are competing with market makers
> and
> > > floor brokers that
> > > are holding offers. It used to be, that if
> you
> > > tell your broker that
> > > you want your offer in the book, that book
> orders
> > > were filled before
> > > floor orders and they were filled in the order
> > > booked. What if the
> > > bid/offer in the crowd was $3.00 at $3.50?
> You
> > > can put a bid or offer
> > > anywhere in the middle in $.10 increments.
> > > Whether you would get
> > > filled or not is another matter, but if your
> offer
> > > was at $3.30 it
> > > could read $3.00 at $3.30 or a market maker
> could
> > > rest upon your offer
> > > and offer at $3.20 knowing that your offer was
> > > there if the price of
> > > the underlying starts to rise. When you
> cancel
> > > your offer the market
> > > might very well go back to $3.00 at $3.50.
> Your
> > > offer was the market
> > > makers stop loss.
> > > >
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