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| Discuss What is the “edge” you have in the markets? at the Trading Psychology within the Traderji.com - Discussion forum for Stocks Commodities & Forex; Originally Posted by kkseal CV, if you're using some form of the Stat Arb ... |
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#51
19th March 2008, 07:42 PM
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Re: What is the “edge” you have in the markets?
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Is this a valid pair? If so, what kind of price movements would you expect? Regards, Kalyan. 
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#52
19th March 2008, 09:12 PM
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Re: What is the “edge” you have in the markets?
Hello Kalyan
To start with just focus on delta for the option pricing model, assume that all other things are equal. Then it would be possible to model the price change in an option wrt the price change in the stock/index. Usually the At The Money options have delta of 0.50, so the option moves at 50% gain/loss initially (Note that as it goes in the money the delta keeps increasing towards 1). If you want to be an options buyer, as a rule of thumb, buy options that are In The Money or deep in the money for a better RR (need to look out for liquidity issues specially at projected target areas). Infact there is a small edge right here for you. All the greeks are important, but to start with if you just focus on the change in premium as the Strike Price Moves towards / away from the CMP, you will get the big picture (Option Payoff Diagram), maybe I will compile that for NF and post it here. Regards Sanjay Last edited by SGM; 19th March 2008 at 09:40 PM. Reason: attachment
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#53
19th March 2008, 09:42 PM
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Re: What is the “edge” you have in the markets?
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#54
19th March 2008, 10:20 PM
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Re: What is the “edge” you have in the markets?
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dont want to hijack this thread. CV's comments on edge would be extremely useful. So going to my giant dead thread to answer you.
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#55
20th March 2008, 01:42 PM
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Re: What is the “edge” you have in the markets?
Thanks Sanjay, Avi. Will answer in the evening as currently stuck with some work.
BAV is right about not hijacking this thread. Maybe the pairs question can be discussed on the thread on pairs trading. Regards, Kalyan. P.S. CV seems to be busy milking CHEVRON/EXXON or maybe the Dow in general.  That makes another (inverse) pair - CHEVRON, EXXON - short, BPCL, IOC - long 
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#56
20th March 2008, 02:52 PM
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Re: What is the “edge” you have in the markets?
c'mon kk, why should CV bother with pairs for miniscule profits? He must have shorted 1000 lots Nifty and 100 lots Reliance.
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#57
20th March 2008, 08:00 PM
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Re: What is the “edge” you have in the markets?
Oh yeah, if big brother cracks doubtful if anything will hold. But CHEVRON, EXXONN may still be good for today (gave better % returns than the Dow yesterday).
Anyway switching over to the 'awakened giant' Regards, Kalyan.
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