Options Mentoring

[suhm]

For question 2 I was talking about company issued options, but they are listed on the ASX.

With regards to question 3 I was referring to exchange traded options, enquiring if there was an open outcry system and if the market makers would take an opposing position in an illiquid stock.

 

[mazzatelli]

1. Is there a formula to determine an option price not using a normal distribution? I've only done some stats courses since high school so its a bit beyond me to try to alter the black scholes equation myself.

Adjustments for non-Gaussian density is reflected in strike and tenor skew [vol].

 

[christhong]

hi guys.

does anyone know what happens to one's options in a company if that company is taken over? much thanks in advance!

 

[cutz]

hi christhong,

I haven't had much experience with takeovers but are you talking about exchange traded options ?

 

[christhong]

hi christhong,

I haven't had much experience with takeovers but are you talking about exchange traded options ?

yeah cutz, i've got a call option for OZL and there was some speculation as to whether or some other company (eg bhp) will try to take it over for its assets so i'm wondering what'll happen to my options if, hypothetically, OZL gets taken over say right now. before anyone can sell/exercise their options.

 

[wayneL]

yeah cutz, i've got a call option for OZL and there was some speculation as to whether or some other company (eg bhp) will try to take it over for its assets so i'm wondering what'll happen to my options if, hypothetically, OZL gets taken over say right now. before anyone can sell/exercise their options.

Your option position will be adjusted to account for it somehow, as is the case in all corporate actions. Your options won't just be cancelled. Keep an eye on the ASX site in such circumstances.

 

[mazzatelli]

Wilmott vs. CNBC

The chick looks clueless

 

[cutz]

Wilmott vs. CNBC

The chick looks clueless

Interesting mazza,

The two reporters don't seem interested to hear about what's still lurking in the background, just wanting some rubbish for the feeding frenzy.

 

[wayneL]

Wilmott vs. CNBC

The chick looks clueless

Sounds like Wilmott is long gamma.

 

[mazzatelli]

Sounds like Wilmott is long gamma.

Wilmott actually trades? : jk
Not surprising really, he and Taleb are good buddies

Yeah cutz, its better for ratings to get a stock pick

 

[cutz]

Hi fellow option enthusiasts,

Does anyone have any tips on straight out directional plays, for instance buying ATM puts as a strategy, tried one one the other day with XJO but i'm starting to regret it now, i was thinking along the lines if you don't get a big move within 2 days get out or maybe stick with futures.

What da ya reckon, how long do you guys let negative theta run till you decide it's time to get out (assuming the underlying is refusing to move) ?

 

[mazzatelli]

Try model it as Shadow Theta
Too many variables [vol, direction, time] to be able to suggest options vs. spot.
Personally I would short the futures in the majority of cases if pure directional bet.

 

[wayneL]

Hi fellow option enthusiasts,

Does anyone have any tips on straight out directional plays, for instance buying ATM puts as a strategy, tried one one the other day with XJO but i'm starting to regret it now, i was thinking along the lines if you don't get a big move within 2 days get out or maybe stick with futures.

What da ya reckon, how long do you guys let negative theta run till you decide it's time to get out (assuming the underlying is refusing to move) ?

If I take a directional punt with long options, it's basically a trend trade on 30 minute bars. Long puts are not bad because you pick up vols as it goes in your favour. I'll have an if/then plan in place which evolves as I either win or lose.

I like to morph, but sometimes an inglorious exit is the only way.

A 30-60 ema (34 or 55ema if you like fib nos.) on 30min bars is what I use as decision points.

 

[Grinder]

I don't take directional bets unless used for protecting a position. If was going to I would probably go further out in time to give it a chance, if the move does'nt come anytime soon would look at converting it to a maybe a vertical spread or even a ratio by selling an extra one further out. If the market goes your way it can redeem itself, if it does'nt then morphing from their onwards into something with limmited risk would be the next move.

 

[cutz]

Thanks guys,

Decided to exit that strategy and adjust the current index spread i've got on, i think in hindsight best not aim for a king hit, eats to much into the carefully built up spread profits.

 

[Grinder]

think so too. The only potential windfall I get to relish in is the very very occational leftover otm put or call that all of a sudden comes good.

 

[mazzatelli]

Decided to exit that strategy and adjust the current index spread i've got on, i think in hindsight best not aim for a king hit, eats to much into the carefully built up spread profits.

Probably not the best thing to be fading against your current position

 

[Tysonboss1]

Hi Guys,

I have just linked an options trading account to my commsec margin loan and wish to write covered calls.

Does anyone know how I would go about doing this. I can't seem to find how to do it.

 

[cutz]

Hi Guys,

I have just linked an options trading account to my commsec margin loan and wish to write covered calls.

Does anyone know how I would go about doing this. I can't seem to find how to do it.

Are you able to access your account ?

If you can just short a call option.

 

[Tysonboss1]

Are you able to access your account ?

If you can just short a call option.

I want to write a covered call so as to collect a premium.

do you know how I do this on the commsec website.

I have been trying to figure it out with no luck,

if you could tell me what I need to click on it would be great. ( I know this sounds like I am brain dead But I am seriously having trouble finding info on how to do it)