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Strategies & Market Trends : Stock Attack -- A Complete Analysis
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To: donald sew who wrote (23975)6/1/2000 11:25:00 PM
From: Dan Duchardt  Read Replies (1) of 42787
 
Donald,

A sort of question, or just thinking out loud about the put/call ratio. I don't know the relative weights of the contributions of different options strategies to the overall volume, but I do know there are strategies that are not particularly bullish that involve only calls and no puts. I'm dabbling with one right now that involves call debit spreads with LEAPS where I hope to capitalize on the low market, and the downtrend to get into some spreads very cheaply (actually hoping to get them for free) that will not pay off for a long time. The idea is that in the short term I'm not particularly bullish, but I do think that over the next year and a half some beaten down stocks will at some point be higher than they are now. Other people write covered calls and spreads with a long LEAPS and a short near term call. They just write deeper in the money calls when things look weak, and out of the money when the market looks stronger. My guess is that most people are just more comfortable with calls, and that skews the volume to that side, even when the near term future does not look so rosy. It might be more significant to see how the prices of the options relative to the underlying stock change instead of looking at volume ratios. I don't know where to find that data.

Any comments?

Dan
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