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Strategies & Market Trends : Classic TA Workplace

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To: Shack who wrote (86127)	11/19/2003 5:20:06 PM
From: Joseph Silent	Read Replies (1) of 209892

The premise behind option resistance is that 90% of all options expire worthless Shack, I don't believe this is quite right. On the other hand I'm damned if I know what the truth is. There are several option-related myths (I use the term "myth" in the technical sense and not the colloquial sense) floating around. Because I've continually had trouble with historical data, I'm left with more questions than answers. A document put out by the CBOE (called "Trading Index Options - Tactics and Strategies) says, on page 18, "it is a misconception that 90% of options expire worthless. Only about 33% of options expire worthless. The rest are closed or exercised". My data, being what it is, gives a mixed message. I generally don't see noticeable changes in OI toward expiry. Also, I'm distribution-oriented and very wary of strong statements about averages. They mean little in an "options-world" that thrives on variability.

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