I guess it is an individual thing. I just spent an intense learning time with them at OASIS, and have been back to their basic class several times. Most importantly, you CAN spend lots (would be tough to spend 20-30K though); they have lots to offer. But it isn’t necessary. My biggest expense is the annual subscription to Optionetics Platinum…I’ve spent lots more trying other software.
It certainly isn’t for everyone.
Thanks,
Pete
From: OptionClub@yahoogro
Sent: Thursday, July 08, 2010 6:20 PM
To: OptionClub@yahoogro
Subject: [TheOptionClub.
Years ago I was an Optionetics student, too. Spent $3,000 and learned
very little about option pricing or the greeks. They showed me a number
of great ways to spend $20,000 to $30,000 with them, however.
Christopher Smith
TheOptionClub.
--- In OptionClub@yahoogro
>
> Irshad,
>
>
>
> Regarding a good source for understanding and applying the Greeks, but
more
> importantly, all about options and how to trade them, I recommend
> Optionetics.
and
> have repeated classes (for free) a number of times, as well as
attended
> their annual OASIS three day function for updates. Best money I ever
spent.
> Finally, Optionetics has a POWERFUL analytical website (Platinum Pro),
with
> full historical options data, and amazing search and trade analysis
> tools.unlike anything I've seen anywhere else. It was created by
> professional traders for professional traders (at least that's what
they
> say!) You can try it for free for two weeks, but be prepared to drink
from
> a firehose! Of course, there are lots of sources and I use them too.
>
>
>
> Pete
>
>
>
> From: OptionClub@yahoogro
On
> Behalf Of TheOptionClub
> Sent: Thursday, July 08, 2010 12:38 PM
> To: OptionClub@yahoogro
> Subject: [TheOptionClub.
>
>
>
>
>
> Irshad,
>
> You have to be careful about assumption like those you are proposing.
> Always keep in mind that the greeks are outputs from an options
pricing
> formula, but that option prices are not determined by option pricing
> formulas. Option prices are dictated by the laws of supply and demand
and
> the option pricing formulas simply try to explain why the prices are
what
> they are. That explanation always comes down to a measure of implied
> volatility.
>
> In general, we do expect to see implied volatility ease when the
market
> moves higher but this is not always the case. Maintaining delta
neutrality
> addresses the directional risk present in your portfolio, but often it
seems
> that traders lose sight of the real goal. In my book, the goal is not
to
> reduce my delta to near zero. Rather, my goal is to manage risk.
Those
> greeks help me assess where the risks lie and provide me with some
guidance
> as to what I might do to address unacceptable risks.
>
> The danger I find is that as traders begin learning about the greeks
they
> lose sight of the bigger picture. Option prices are going to respond
to the
> demand present in the market. That demand is a reflection of the
relative
> expectation of the marketplace for future price movement. When the
market
> grows concerned that equity prices are susceptible to significant
price
> movements of 3SD or more you will see option prices rise. This is
reflected
> in an inflated implied volatility. As the concern of the market eases
the
> demand for options subsides, which is in turn reflected by a lower
implied
> volatility.
>
> Implied volatility only effects the extrinsic or "time value" of an
option.
> So, if the implied volatility rises the option's time value has
increased.
> The expiration date of that option remains unchanged, however. With
the
> knowledge that options lose all of their time value as of their
expiration
> date we know that the relative "time decay" has to increase for the
option's
> time value to be reduced to zero by that fixed date of expiration. Of
> course, this is all mathematical theory and imperfect at that because
even
> with a large theta an option's implied volatility can continue to rise
and
> inflate the value of an option's time value even as expiration
approaches.
>
> So, the answer to your first question is that your assumption is not
> necessarily correct. It is true that when you see market prices
trending
> higher you will often see implied volatility subside. With that lower
> implied volatility you will necessarily see less time value in your
option
> and, therefore, a smaller decay rate. Your option's vega is a
measure of
> it's sensitivity to changes in the implied volatility. While
potential
> price collapse is often a cause for increased implied volatility other
> factors can inject uncertainty and concern into the market. Earnings
or FDA
> announcements are prime examples. Such events can inject concern into
the
> minds of investors who in turn seek to protect their equity positions
even
> if prices have been trending higher. This increase in demand for
options
> will result in a rise in the option's pricing and, consequently, a
rise in
> the implied volatility figures returned by an option pricing model.
>
> In other words, even though there is often a correlation between price
> movement of the underlying and implied volatility, there is no direct
link.
> Assuming that there is a direct link is an incorrect assumption.
Where you
> will find a direct linkage is between implied volatility and the price
of
> the option. In fact, many who really know this stuff will tell you
that
> implied volatility IS the price of the option.
>
> I don't have any one book or on-line resource to suggest. In my
experience,
> learning this stuff requires a bit of struggle. You'll just need to
keep
> working at it until your mind wraps around it and grasps it. There
are many
> resources on-line, but quite frankly I think this message board is as
good
> as any of them. I might also shamelessly plug the Trading Room
> <http://member.
> achieving a good understanding is persistence.
>
> Christopher Smith
> TheOptionClub.
>
>
>
> --- In OptionClub@yahoogro
wrote:
> >
> > Hello Option Gurus,
> >
> > Need your help in understanding and setting up build block for
delta
> nuetral position. Based on the three standalone option theories
> >
> > 1) When underlying (price) goes up, Volatility goes down
> > 2) When Volatility goes down, Gamma (net, long or short) goes up
> > 3) When Volatility goes up, Positive Theta goes up
> >
> > Question #1, Is it correct to assume that, if price go up, then vega
(net)
> & theta (positive) goes down and gamma (net) goes up and vice versa,
when
> prices go down?
> > Question #2, Is there any recommended book or online resource that
can
> help in understanding & maintaining delta neutral position either on a
> periodic basis or on occurance of an event like x% movement in
underlying or
> change in volatility?
> >
> >
> > Appreciate your response in advance, Happy trading!!
> >
> > Best
> > - Irshad
> >
>
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