John Pitera's Market Laboratory Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : John Pitera's Market Laboratory

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Jack of All Trades who wrote (1907)	5/31/2000 6:42:00 PM
From: Defrocked	Read Replies (2) of 33421

Regardless of what model you use, the fair value is determined by where the pit trades the option. The price is an almost instantaneous balancing act between supply/demand, basket arbitrage conditions, put/call arbitrage and quasi-arb spreads with futures. The pit is "staffed" by well-capitalized traders whose main job is to "warehouse" volatility while beating their financing costs consistently over time. Just try to execute an arb using those quotes and you'll see that it can't be done at a profit off the floor. There's no arb there and the only info it imparts is that your service is screwed up.-s- Sorry if this post sounds pompous, but I just didn't want you to employ/interpret data that has to be erroneous. (I mostly use Bloomberg along with other info providers.)

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next