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When the underlying moves opposite to the direction of an option and price
either does not change or increases, an increase in implied volatility is a
given. Implied volatility increases when there is a change in investor
risk sentiment and this is what precedes changes in market direction. Not to
imply that all volatility events lead to changes in direction. This was the
basis of my comment, coupled with strong resistance in 1160-73 range, that the
market could be putting in a blow-off top.
Earl
<BLOCKQUOTE
>
----- Original Message -----
<DIV
>From:
Alex Bell
To: <A title=realtraders@xxxxxxxxxxxxxxx
href="">EarlA
Sent: Friday, March 05, 2004 9:30
AM
Subject: Re[2]: [RT] sp500/nasdaq
top
Hello EarlA,Puts rallied on
strong market rallie mean only their
impliedvolatility increased. What is quite natural
in the light of strongprice movement (dependless of its
direction).Best
regards, Alex
<A
href="">mailto:alex_bell@xxxxxxxFriday,
March 5, 2004, 6:42:59 PM, you wrote:E> Fascinating market action
... SPX has rallied to 1162.99 (within myE> target range) while the
price of the June 1150 puts I hold (and hadE> orders for more) has also
rallied. This suggests that the market isE> putting in a blow-off. Had
to short emini since it looks like theyE> won't fill my put
order.E> I assume that this rally is all about the perceived notion
that the Fed won't raise rates so the market can party longer. Not a thought
to the fact that continued employment problems will lead toE> reduced
consumption and other (economic and political) fall-out from reduced consumer
confidence. Foreign currencies are rallying hard which means even higher
energy prices are in the cards.E> EarlE>
----- Original Message ----- E> From: EarlA
E> To: <A
href="">realtraders@xxxxxxxxxxxxxxx
E> Sent: Friday, March 05, 2004 6:11
AME> Subject: Re: [RT] sp500/nasdaq
topE> SPX is very close to long standing target
range of 1060-1073 which includes: 50% retracement to ATH, 200% expansion of
Oct02-Mar03 swing, and Dec01-Mar02 triple top. E> I
closed out long emini position just ahead of Thursday's close leaving in place
a SPX put established on Wednesday. I also have orders working to add to put
position on any rally from monthlyE> Employment Lie. During the past
couple of weeks I've closed out all trading positions in stocks and now hold
significant cash position. I still like energy stocks and hold core positions
to whichE> I will add during any correction in
equities.E> There should be good support in the 1015+-
area which includes the 38% retracement to the Mar03 low and the Jun-Jul03
highs. If this area holds, then another run to higher highs (1250+-)
couldE> be in the cards. On a fundamental basis, the market is richly
priced and risks are strongly to the downside should the public lose its taste
for speculation.E> Earl
E> ----- Original Message -----
E> From: profitok
E> To: <A
href="">astrofin@xxxxxxxxxxxxxxx ; <A
href="">realtraders@xxxxxxxxxxxxxxx
E> Cc: Yacov Twena ; vincent ; U. <A
href="">Stuart-Auslander@xxx. Net (E-mail) ;
Slawek (E-mail) ; Ronald McEwan ; Ron Miller (E-mail) ; <A
href="">panda2222@xxxxxxxxxxxxx ; <A
href="">ntt-list@xxxxxxxxxxxxxxx ; Ned
MarksonE> (E-mail) ; Mike Burk ; Kate (E-mail) ; <A
href="">Jseaton357@xxxxxxx ; <A
href="">Gocycles@xxxxxxx ; Elizabeth (E-mail) ;
doroty.h ; Dom Perrino ; Dan C (E-mail) ; Cyclesman (E-mail)
E> Sent: Thursday, March 04, 2004 9:43
PME> Subject: [RT] sp500/nasdaq
topE> Most likely 3/5/04
should be a top for a whileE> get out of
longs and if you have long term gains consider writing
callsE> most likely next is 1050 on
spE> if I am wrong, the max upside is only
10-15 sp pointsE> best
regardsE> BenE>
----------------------------------------------------------------------------E>
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