Dont agree with a lot of the "experts" here

srikanth_kandalam · #1 9th August 2007, 01:45 AM

Frankly I am amazed at the stuff that is being posted here on option trading. There are fundamental differences in trading option- you ignore this and you will burn yourself.

First- you need to have an idea of what the Implied volatility of a certain option is. You will need to Benchmark this with the Statistical or Historical volatility- to make a judgement whether the option is "cheaper" or "costlier"

Without this fundamental information- the guys who are suggesting trading options based on stock movements are dead wrong.

In addition you need to know about the "greeks" of the option you are considering trading. Like some jokers here were quoting buying options based on stock movements- do you guys realize unless you buy DEEP ITM options- your option prices will not move as fast as the underlying? If you bought ATM ( at the Money options) the best you will have is a delta of ).5 approx. That means if stock price goes up by 1 rupee your option price goes up by 50 paisa. Try making money after you pay the brokerage!

I am not even going into implied volatility changes which are the MOST important aspect of pricing- and is ignored by most novice traders. Simply put implied volatiliy is like the tides at sea- when the tide is hig- the options get pricier and when it is low it gets cheaper- the fundamental aspect to winning- is to be aware of these changes and not Just stock and option quotes- if you do that you jokers who are talking about buing and selling- will just mislead some innocent guys to be slaughtered.

I just chanced on this site- I want to trade options- but I have not found a credible resource that gives me the greeks and volatility info- without this if you are trading- best of luck.

swagat86 · #2 9th August 2007, 08:05 AM

Quote:

Originally Posted by srikanth_kandalam

Frankly I am amazed at the stuff that is being posted here on option trading. There are fundamental differences in trading option- you ignore this and you will burn yourself.

First- you need to have an idea of what the Implied volatility of a certain option is. You will need to Benchmark this with the Statistical or Historical volatility- to make a judgement whether the option is "cheaper" or "costlier"

Without this fundamental information- the guys who are suggesting trading options based on stock movements are dead wrong.

In addition you need to know about the "greeks" of the option you are considering trading. Like some jokers here were quoting buying options based on stock movements- do you guys realize unless you buy DEEP ITM options- your option prices will not move as fast as the underlying? If you bought ATM ( at the Money options) the best you will have is a delta of ).5 approx. That means if stock price goes up by 1 rupee your option price goes up by 50 paisa. Try making money after you pay the brokerage!

I am not even going into implied volatility changes which are the MOST important aspect of pricing- and is ignored by most novice traders. Simply put implied volatiliy is like the tides at sea- when the tide is hig- the options get pricier and when it is low it gets cheaper- the fundamental aspect to winning- is to be aware of these changes and not Just stock and option quotes- if you do that you jokers who are talking about buing and selling- will just mislead some innocent guys to be slaughtered.

I just chanced on this site- I want to trade options- but I have not found a credible resource that gives me the greeks and volatility info- without this if you are trading- best of luck.

u urself dont trade options and u call others jokers huh...

PS: i have never adviced anybody to b/s options.

srikanth_kandalam · #3 9th August 2007, 08:40 AM

Quote:

Originally Posted by swagat86

u urself dont trade options and u call others jokers huh...

PS: i have never adviced anybody to b/s options.

Let us keep to the discussion and avoid personal stuff. I dont trade options in India- I plan to if- If I get the reliable date on IV,SV and greeks. Perhaps you are the India expert- let me know if you could help?

And FYI I have been trading for a decade- so if you want to talk about options and talk about specifics- go ahead let me know where I was off track in my post.

swagat86 · #4 9th August 2007, 09:16 AM

Quote:

Originally Posted by srikanth_kandalam

Let us keep to the discussion and avoid personal stuff. I dont trade options in India- I plan to if- If I get the reliable date on IV,SV and greeks. Perhaps you are the India expert- let me know if you could help?

And FYI I have been trading for a decade- so if you want to talk about options and talk about specifics- go ahead let me know where I was off track in my post.

Gud i like professionalism. Gud to hear uv ben trading sinca a decade. And im no expert but i do keep trading options at times.

For Data on OPtions
http://www.metastock.ca/quotecenter.aspx

For geeks try Optionsoracle.
http://www.softpedia.com/get/Others/...nsOracle.shtml

Like to have ur views too.

sunil saranjame · #5 9th August 2007, 09:55 AM

Swagat, I would agree with Srikanth here. Data on Options must be published by the NSE, and we just don't have that data. Period. Talk about IV, these guys (NSE) can't come up with a put call ratio!

Regards,

ss

swagat86 · #6 9th August 2007, 10:03 AM

Quote:

Originally Posted by sunil saranjame

Swagat, I would agree with Srikanth here. Data on Options must be published by the NSE, and we just don't have that data. Period. Talk about IV, these guys (NSE) can't come up with a put call ratio!

Regards,

ss

Arrey ofcorse,

Options without geeks is damn risky. but then for trading any market we have to always consider liquidity. which is always there in nearest round figure options. like 4400, 4500, 4600.

and for geeks Optiosn oracle is a free sw which gets data from NSE servers. check the screenshot.

srikanth_kandalam · #7 9th August 2007, 10:10 AM

Swagat

I did go to the websites- I am very familiar with Meta stock. Infact I personally use Optionvue which is the leader here. I did talk to them - since they originally had data on Indian market. It seems they ran into data issues and hence did not have too much traction there.

The second website you suggested is again a software package- the issue is to get accurate data- except on Index options the volumes are really low- and to the best of my knowledge there are no option Market Makers in India who will at all times give at least 3 strikes of bid-ask . No wonder a lot of people believe that this is all mumbo jumbo and has nothing to do with the serious math that is the underpinning of the Black Schole's Model ( or its variants).

I will be happy to share my thoughts- and refer you guys to a free download ( Not sure if it is free anymore)- it was by charles Cottle entitled "woulda, coulda, shoulda" - NO other book on options comes close to what Charles has done. IF I find the PDF I will make it available- but not sure as it has been a while.

Implied volatility and deltas are like Dials on your bike- once you appreciate their importance- you will easily be able to follow more technical conversations on options. Without that- it is just plain gambling at best!

srikanth_kandalam · #8 9th August 2007, 10:16 AM

Quote:

Originally Posted by swagat86

Arrey ofcorse,

Options without geeks is damn risky. but then for trading any market we have to always consider liquidity. which is always there in nearest round figure options. like 4400, 4500, 4600.

and for geeks Optiosn oracle is a free sw which gets data from NSE servers. check the screenshot.

I will check the data as you suggested- but till I feel comfortable with some theoretical trades- I would be sceptical. Nothing wrong with being careful right!

I do see IV figures- but without Historical volatility IV would be really meaningless- as you cannot make judgement calls of whether these options are "cheaper" or "costlier"

Anyway I will check the data a little more- and report back.
Frankly from what I noticed- this is the perfect time for options trading!

srikanth_kandalam · #9 9th August 2007, 10:21 AM

Swagat

Liquidity is important- no doubt, but that is to ensure your get a decent price and fast fills on orders.

Another issue I am not really sure is how they margin positions- for example if I sold a strangle- will they be asking me to put down margins both for the PUT and CALL side? that makes a big difference when calcualting risk VS Reward. Let me know

If you do not trade at a risk /reward of 1 to 2 atleast- it just is loaded against you.

swagat86 · #10 9th August 2007, 10:26 AM

Quote:

Originally Posted by srikanth_kandalam

Swagat

I did go to the websites- I am very familiar with Meta stock. Infact I personally use Optionvue which is the leader here. I did talk to them - since they originally had data on Indian market. It seems they ran into data issues and hence did not have too much traction there.

The second website you suggested is again a software package- the issue is to get accurate data- except on Index options the volumes are really low- and to the best of my knowledge there are no option Market Makers in India who will at all times give at least 3 strikes of bid-ask . No wonder a lot of people believe that this is all mumbo jumbo and has nothing to do with the serious math that is the underpinning of the Black Schole's Model ( or its variants).

I will be happy to share my thoughts- and refer you guys to a free download ( Not sure if it is free anymore)- it was by charles Cottle entitled "woulda, coulda, shoulda" - NO other book on options comes close to what Charles has done. IF I find the PDF I will make it available- but not sure as it has been a while.

Implied volatility and deltas are like Dials on your bike- once you appreciate their importance- you will easily be able to follow more technical conversations on options. Without that- it is just plain gambling at best!

Options Trading: The Hidden Reality ("Options: Perception and Deception" & "Coulda Woulda Shoulda"

isnt this the one??

Thanks for ur info

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