Dave,
thanks for the valuable information and knowledge.
I will check Interactive Brokers.
They give you direct access to all five options exchanges
i take it that the fifth exchange is the LIFFE (London International Financial Futures & Options Exchange) ? interesting, i should investigate trading in that exchange.. btw i stumbled on these news (Sept 2000)
ohio.com
The problem with naked selling without any hedge is that it has very unfavorable risk/reward characteristics over the long term.
yes, i am aware of this condition i monitor my positions constantly, in the last few months the environment has been particularly favorable to sell calls, however, this could change. in addition, i trade naked only a percentage of the total. the anchor positions are covered, (and thanks to the calls the overall account has been protected.
recently i have moved to mostly cash. believe me i have had my share of losses. my current ratio of win/losses runs about 65/35 % or so, (i don't have the numbers handy. i am trying to improve to 75/25 but for that i have experienced that i need to trade less, and plan the trades better... maybe this year. (Jan came at 100% wins) i reduced the number of trades significantly, however, they were good trades. doubled what i made Jan/00. so that was a great start... but it only is the beginning, so i should be careful.
Why do you think that's a problem? After all you are free to send your order to the exchange quoting the best price.
quite the coincidence you say that... in doing research to find a better broker one of the cybercorp guys said the exact same thing. he went as far as saying that in some instances there are arbitrage opportunities. I never viewed it that way, and i assume that it could be possible.
to take advantage of that i would have to have the ability to direct the trade to the specific exchange. and a better commission structure would certainly help.
further, he told me, (with some sort of smile in his face --i could feel this by the tone of his voice plus i tend to be somehow intuitive at times--), that it would be up to two years before this would actually happen. yes, i am going to start paying closer attention to this.
under the current set up with Schwab, this would not be feasible, given that unless i call the broker (increasing the commission), i cannot select which exchange to place the order.
It serves as a starting point for the determination of implied volatility which represents the market's (not just the MM's) consensus of what the underlying's volatility is likely to be in the future over the course of the contract's lifetime.
true... and you are correct, with the support of the value given by the pricing model, is a base from which to start. it is a better approach as opposed to not have any "starting benchmark".
...and take advantage of the over- or underpricing.
yes... particularly if you put the complete set of ideas from your post together.
thank you again... i am reading the web page for Interactive Brokers already. good luck with your thesis, and i appreciate your knowledgeable contributions here in the thread. |
