Steve, re:As an option player, I wonder if you've noticed that the options will LEAD the index.
Absolutely! As you know the cash indices are calculated periodically, based on the associated stocks; so, the kicker is that options will often lead the stocks.
One of the tricks I attempt is the identify the index leaders and laggers, watching the associated options. Take for example NDX:
Earlier in the week DELL/CSCO were the leaders, INTC/MSFT were the laggards. For whatever reason, the "ghost in the machine" attempts to balance the stocks during neutral days; that is, if MSFT suffers, CSCO will correspondingly benefit. [Don't ask me why.] So, the lag that you've described becomes exacerbated... MSFT options may tip the direction of MSFT, correspondingly telegraphing the direction of CSCO. BTW, at this time INTC/MSFT are the favs.
Because the action is so swift -- and my order system isn't -- the above is more or less entertainment for me.
Regards,
Alan |
