Australian (ASX) Stock Market Forum

How Far Will The Market Fall?

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joeno said:
That's the premise of options anyways. You buy and either you make a factor or lose it all.
Yes options are more expensive because of volatility. But it's very fair.
Click to expand...

don't know about it being particularly fair at the moment.

i took one look at the options market yesterday and concluded that options are virtually untradeable at the moment. for me at least anyway. haven't bothered checking the market today as i know i'm not going to be making any trades.

i saw some ATM options were trading at a 72 IV. basically saying that the 1 SD variance for a month is about +/- 20%. but at the bid, the IV was around 50. at the offer, it was close to 100. and those were ATM options - buying OTM puts would be even more expensive in IV terms as the delta skew always gets really steep when this sort of thing happens.

i didn't put any order in as i wasn't actually interested in trading them, was just curious what the IVs were like, so i don't know for sure, but at a guess i would say that in an environment such as this, the MM will make you cross most of that spread regardless of whether you're buying or selling. so unless you can chance upon another retail trader wanting to take the opposite side, good luck getting a decent fill.

and what were those options on? well, it wasn't some small stock that hardly anyone's heard of, owns or trades. it was CBA. one of the most liquid options on the ASX, and along with TLS probably amongst the least volatile historically.
 
It's interesting to compare the GFC with this week's market collapse.

Global Financial Crisis November 2007 - March 2009

big.chart-GFC.gif

Coronavirus Market Crash March 2020

big.chart-coronavirus.gif

Two completely different beasts. The GFC was a slow, measured transformation from a bull market to a bear market, while this week's correction was a short, sharp, brutal market collapse.

The question is, are we going to have a V-shaped snap back recovery... or will the after-effects of the coronavirus persist and linger for months or even longer?
 
I've picked up a few shares today. Still looks just a tad bit high on a few things. Still room for movement down for us tightwads.

I'd expect a strong response from world governments or financial markets are going to lock. The response may be the sugar rush the market needs. But I don't see recovery back to 7000.
For all we know markets might be choppy till US elections are over.
 
couldn't resist taking a quick peek at the CBA options today, again out of curiosity more than anything else, there is no way i'm going to be dealing any options at this point.

some narrowing of the spread near the money, about 92/108 (in IV terms) at the nearest strike, so it's vaguely tradeable if one sees those IVs as representing good value from one side or the other.

completely untradeable at the wings though. at 25'ish delta, the spread is about 76/210 on the puts and 42/120 on the calls. nobody wants to sell OTM puts in this climate and even if you could somehow get the mids, you'd have to pay nearly 2% of the stock price just for a ~2 week 25 delta collar.
 
greggles said:
Two completely different beasts. The GFC was a slow, measured transformation from a bull market to a bear market, while this week's correction was a short, sharp, brutal market collapse.
Click to expand...
Looking at past declines, this one looks more like 1929 than anything recent based on charts of indices that were around back then (eg the Dow was). :2twocents
 
Not based on any proper T/A but I'll say it here that the market does look as though we could be about to get the bounce.

Yes there's been a plunge last night in the US and today in Australia but there are divergences eg oil.

Don't take my observation too seriously - it's really just gut feel looking at an assortment of charts and the news. Looks rather like the sort of thing for a short term bottom and I'm thinking we'll see a major move up tonight overseas. Proceed with extreme caution..... :2twocents
 
Wow!! Talk about the giant sling shot of stock exchanges.

XAO starts the day at 5304. Drops 360 points in the first 10 minutes of trading. Frankly on the past few days that now looks "normal"

Meanders up and down (more down actually) until it hits 4884 at 12.40. That was a 420 point drop or about 8% :eek:

Three hours later at 15.40 the market is at 5433. It has jumped 550 points.

But we can stop counting our chickens because in a scant 10 minutes :eek: :eek: it has fallen 130 points.

This reminds of the last hours of late night poker games when people are making drunk, crazy bets

 
Got a buy signal for this bounce off the 3hr chart and took it. Hit my take profit before I even had time to blink!!
 
Does this all mean the Corona Virus is now dealt with and we can get back to normal ?
(Or was it just some desperate crap shooters (and shorters:rolleyes:.) getting onto a roll ?)
 
upload_2020-3-13_16-15-41.png

And does the old maxim "Amateurs open markets, professionals close them" have implications for Monday?
 
Yea I bought ANZ, STO (well under half of what I sold it a month ago) and QBE.

I'm a bit long term so lets hope the worst is over and we recover in volatility.
 
From Peak:
1987 Crash -33% in 5 weeks
2020 Crash -32% in 4 weeks

China and Korea GDP Q2 is predicted to be positive in a V shape recovery. If other countries do the same for Q3 history books might look at this as a stock market crash outlier like 1987 rather than a typical recession.
 
RBA's 8.5 billion might have something to do with it..... (and guess who's going to eventually have to stump up for that?)
 

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