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Strategies & Market Trends : Waiting for the big Kahuna
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To: Bilow who wrote (9208)11/6/1997 1:09:00 PM
From: Arik T.G.  Read Replies (1) of 94695
 
Carl,

Regarding index options:
In real life it's a little bit different-
After the 500 points drop investors (weather institutional or private) learned the power of OOM index puts. Even after vix regained some consciousness returning from the stratosphere, deep OOM OEX puts still trade around 40% i.v.
However, individual stocks' deep OOM puts do not have that much skew and many OEX components's deep OOM puts trade with i.v. under 40%.
IMO that's sort of a market failure, and suggests investors are not using their brains as much as they use their emotions.

ATG
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