Your statement sounds a bit doubtfully...
I can understand this - however, who really has the possibility to check historical prices of options?
I do have, I can generate historical charts with widely free parameters and can list all prices of the chart - it's a feature of Interquote.* And - we don't discuss "mysterious manipulation" but legal (!!!) stuff. It's just well unknown cause difficult to check.
I self wondered first time about options-pricing when I saw that my C-leap, bought at the MORNING of jan, 3rd (hours before AG came out!!!) never came in thick black while C did not bad. What I mention is that (everytime existing but more moderate) abuse of (legal!) pricing has hit levels given that I cannot use long-leaps anymore.
A "wge an" (GE J2C060) f.e. lost more than 30% ytd while GE kept his level exactly. Correct, there are two rate-cuts and GE's volatility** dropped compared to december, but who of these 16000 contracts owners will be aware of his "investments" prices actually? And of course, out of OUR sight you must add the spread to this "loss" - here just 10% (!!!), with a short check I've just found 30% and more without problems.
Hey, Vito, is this still "calculation" or "investment" when one tries to win more than 30% + "formula-tricks" + proud broker-fees? Few years ago - I'm quite certain - they didn't use to change formula-parameters during the lifetime of a leap this way, and you couldn't find spreads like this except when dramatical bounces were happening.
You ask: Who is "somebody on the other side of the green table"? OK, usually banks, holding great stocks of GE do write calls short. You will hardly find private investors doing this. Some of these banks give our leaps out and their "marketmakers" are responsible for liquidity pricing bits and asks for cboe, phlx or amex.
These persons on the other side of the table sit on the head of the table too and make the price. So far I know, they don't violate no rules or laws, they're free to set the price anywhere they want. And, most of those losers on my side of the table don't realize what happens.
Also in Europe there's no obligation to keep the same parameters they used when they started the option. I'm reading a book about options: they talk about regular and excessive abuse right here. You can countinue smiling ("the smile of the champion") - it's your money, I must take care on mine.
My intention was
a - first to state a warning for other people who use long leaps: ok, you've read what I wrote, thank you, keep on smiling.
b - collect ideas which way we can change to the place on the other side of the table: obviously this is the better place, not only because writing options generally provides better chances in choppy markets.
"b" is not that easy: my broker Dreyfus f.e. don't let me write puts without a covering position of the shorted underlying. Today I will write and ask for covering by cash but I don't have hope that they will learn or help - it would be surprising.
That's it. Again, ideas are welcome. Doubts and discussion are not helpful as long as the effect continues, I will ask for help when I cannot drill my nose myself anymore, promised.
Jury
* just now I got their latest version and cannot create charts anymore due to a bug - so I'm in problems to generate more examples. Murphy.
** IMO it doesn't matter whether you use volatility or other free definable parameters of a formula every can change himself as he wants - the problem is not "if", "how" or "why" but "how strongly" prices are manipulated: can I use this instrument anyway? Do I still have a fair chance? |
