Kind of silly and not particularly an insightful understanding of how
options actually work. First of all even if you have some inside info on
"where a stock will trade" in the future, any order you place has to have
somebody willing to take the other side. If the same firm - or particularly
a big size order - routinely shows up, sooner or later the market makers
figure it out. There's only so many times a manipulator can go to the well
(usually once) before it runs dry. Secondly, there is no way of knowing how
any particular trade fits into someone's strategy or portfolio. A sale of
any specific strike can be a hedge against other strikes or stock position.
no one looking at the individual trade data in isolation could possibly
figure out what's being done (in fact if you had inside info it's highly
unlikely you would trade the obvious simple long or short options to execute
your devious plan). calls/or puts sold or bought are meaningless to a
professional since everything is synthetically something else. Thirdly, the
action around earnings - particularly how goog is timed for expiration
Friday - in itself makes for high volume and furious action as all players
"manipulate" their own positions for whatever risk profile they deem
acceptable. Fourthly, when there is high volume around a strike there will
always be action shoving the underlying toward a strike. That is not
manipulation that is simply the physics of expiration trading. Finally, if
goog is being manipulated, I am entirely grateful for that since it has been
my bread and butter for five years. I play the stock however it moves and
always hold some otm long units into earnings so whether I am one of the
manipulators or the manipulated I can't say. It's just been fun going along
for the ride.
-----Original Message-----
From: OptionClub@yahoogro
Behalf Of bben1006
Sent: Saturday, November 28, 2009 8:41 AM
To: OptionClub@yahoogro
Subject: [TheOptionClub.
Michael,
As someone that is specializing in GOOG for so long, did you notice any of
the 'special' quirks mentioned in: "Has Google Stock Price Been
Manipulated?
(see http://papers.
Given your experience, do you think he has any valid point?
Also, regarding backtesting-
for American style options-how one could possibly account for early
assignment or exercise,--etc.
BBen
--- In OptionClub@yahoogro
>
> Not sure if I'm getting your point exactly but - having traded goog every
> month since it started trading in '04 (I think) - I can say that it does
> have its own little quirks but in general it's really no different than
any
> other trading vehicle.
>
>
>
> Prices/implied volatility are just the consensus bet on value. If you
trade
> that vehicle either or long or short you are simply doing what everyone
who
> trades is doing i.e., saying that the market consensus is either too high
or
> too low and that you think differently. Any vehicle that has occasional
> binary events (such as earnings releases) is likely to have a few
> multi-strike gaps (though a ten point move in a 580 stock is hardly
> earth-shattering)
> consolidation or indecision when price seems to go nowhere for months. If
> you could find a model that back-tested profitably in goog, you would have
a
> model that back-tested profitably in just about every other tradable
> instrument. Now whether that backtest would be of any value going forward
is
> a completely different story.
>
> J
>
>
>
>
>
>
>
> From: OptionClub@yahoogro
> Behalf Of Adam Green
> Sent: Friday, November 27, 2009 3:32 PM
> To: OptionClub@yahoogro
> Subject: Re: [TheOptionClub.
>
>
>
>
>
> I haven't read the whole thread, but I would caution anyone using
horizontal
> positions or anything relying upon limited movement (not volatility) in
> GOOG. As we caught a glimpse over the holiday break, it has no hesitation
> to move through a strike. Look at days when GOOG has moved through more
> than three strikes ... or find a month when a Straddle on GOOG would not
> have been profitable (assuming a reasonably durable trading plan.)
> F'rinstance, I can't back-test it easily on thinkorswim (maybe someone can
> show me?) but I've noted for some years now that I can buy a Straddle,
wait
> for it to move through a strike, take profit off the one side and roll it
> vertically or horizontally either adding or subtracting contracts
depending
> upon preset rules for risk and profit based on technical analysis of price
> action, especially momentum and overall market action.
>
> On Fri, Nov 27, 2009 at 12:32 PM, bben1006 <bben1006@..
>
>
>
>
>
> MC--
> I did, and this is what I got with an IV of 55% - I wonder why?(I must
have
> mistyped something.)? In any case, I think that with your Hoadley's
> calculator it will be very easy for you to replicate the entire comparison
> exercise (FSLR vs GOOG, say) - for the point I was trying to make.
>
> Regards,
> BBen
>
>
> --- In OptionClub@yahoogro
> "mcatolico" <mcatolico@> wrote:
> >
> > Why wouldn't you use an option calculator? With your parameters on goog
I
> > get the 630 implied value at 14.95 or so.
> >
> > -----Original Message-----
> > From: OptionClub@yahoogro
> [mailto:OptionClub@yahoogro
> On
> > Behalf Of bben1006
> > Sent: Thursday, November 26, 2009 11:12 AM
> > To: OptionClub@yahoogro
> > Subject: [TheOptionClub.
> >
> >
> >
> > Your best way to realize/see the differences between these stocks is to
> > 'standardize' the option chain of each underlying by dividing the entire
> > chain (put and call prices and the strikes all for the same month) by
the
> > current price of the underlying stock. The resulting standardized chains
> > will illustrate to you the (nonlinear) pricing-effect of the volatility,
> > giving you the relative costs of the options in relative terms to the
> > percent at-the-money and out-the-money strikes.
> >
> > For example (all with approximate round-offs) : FSLR is currently
$120.97,
> > with ATM IV 55%.
> > The Dec 130 call is nearly 7.5% out-of the money and has a relative
price
> of
> > 2.28% ($ 2.75/$121).
> >
> > Compare this to, say: GOOG, currently at $584.75, with ATM IV 22% .
> > The Dec 630 call is also nearly 7.5% out-of-the money, but it has a
> relative
> > price of only 0.22% ($1.25/$585)
FSLR
> > volatility, the price of this GOOG 630 Call option should be about
$13.3.
> >
> > You can do the rest of the calculations.
> >
> >
> >
> >
> >
> > --- In OptionClub@yahoogro
,
> "Peter Gum" <peter.gum@> wrote:
> > >
> > > Take look at the premiums on things like AMZN, GS, BLK and IBM, for
> > example.
> > > The absolute amounts are substantial, though I have not done the
> > > money-at-risk or ROI calculations. An enlightening exercise can be to
> > > compare the return on the spread with the premium on a comparably
priced
> > (to
> > > the spread) stock. Spreads of any sort look attractive sometimes.
> > >
> > >
> > >
> > > phg
> > >
> > >
> > >
> > > -----Original Message-----
> > > From: OptionClub@yahoogro
> [mailto:OptionClub@yahoogro
> On
> > > Behalf Of billb_
> > > Sent: Monday, November 23, 2009 9:37 AM
> > > To: OptionClub@yahoogro
> > > Subject: [TheOptionClub.
> > >
> > >
> > >
> > >
> > >
> > > I don't understand what price has to do with any strategy to be quite
> > > honest. If price of the underlying gave you an edge, wouldn't that be
> > arbed
> > > away?
> > >
> > > --- In OptionClub@yahoogro <mailto:OptionClub%
> <mailto:OptionClub%
> > > "drrobhansen" <robhansen5252@
> > > >
> > > > I had heard either during a webinar or maybe in a magazine that
> calendar
> > > spreads are best put on with high priced stocks. Is there anyone that
> > would
> > > explain to me why it would be advantageous? Or maybe I'm just mixing
> this
> > up
> > > with some other strategy?
> > > >
> > > > Thanks,
> > > > RFH
> > > >
> > >
> >
> >
> >
> >
> > ------------
> >
> > The goal of TheOptionClub is to provide a forum for members to work
> together
> > for the purpose of furthering our individual understanding option
trading.
> > All messages and postings, and any materials circulated are provided for
> > discussion and educational purposes only. No statement contained in any
> > materials from TheOptionClub should be considered a recommendation to
buy
> or
> > sell a security or to provide investment, legal or tax advice. All
> > investors are encouraged to consult a qualified professional before
> trading
> > in any security. Stock and option trading involves risk and is not
> suitable
> > for most people. There is no guarantee that any information provided is
> > accurate and, may in fact, be wrong. It is understood that the
> participants
> > in TheOptionClub have varying backgrounds and degrees of experience in
> > option trading, and that regardless of experience each member is
> considered
> > a student. As such, any information distributed through TheOptionClub
> > should be considered with a critical mind and not relied upon as an
> > authoritative source.
> >
> > To unsubscribe from TheOptionClub, send an email to:
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> >
>
>
>
>
> --
> Adam
>
------------
The goal of TheOptionClub is to provide a forum for members to work together
for the purpose of furthering our individual understanding option trading.
All messages and postings, and any materials circulated are provided for
discussion and educational purposes only. No statement contained in any
materials from TheOptionClub should be considered a recommendation to buy or
sell a security or to provide investment, legal or tax advice. All
investors are encouraged to consult a qualified professional before trading
in any security. Stock and option trading involves risk and is not suitable
for most people. There is no guarantee that any information provided is
accurate and, may in fact, be wrong. It is understood that the participants
in TheOptionClub have varying backgrounds and degrees of experience in
option trading, and that regardless of experience each member is considered
a student. As such, any information distributed through TheOptionClub
should be considered with a critical mind and not relied upon as an
authoritative source.
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