Silicon Investor (SI) -- The First Internet Community

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 : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Herm who wrote (11141)	7/2/1999 5:25:00 PM
From: tuck	Read Replies (2) \| Respond to of 14162

Herm, I ran into an odd situation today while trying to ride the Edify viper. I'll spare you the details of why I wanted to do the following transaction. Suffice to say that the last visit to the high 9's tested even my relatively modest use of margin, and a while ago I wrote November 12.5 s on half my position, because I wanted to keep the stock. Today I wanted to roll down and out to the February 10s to generate some more cash (gotta pay bills). A while ago, I posted my intention to do this by a net credit spread so that I did not expose myself to fast moves while executing separate orders. In keeping with that idea, I entered an order for a 1 3/4 net credit. This was 1/8 more than the spread quoted, but I thought I might get 1/16 on either side of the transaction. Not surprisingly, that didn't happen. Since I wanted to get it done today, I changed it to 1 5/8 at 11:30A. Since the Nov. 12.5s were at Ask of 4 1/8 and the Feb. 10s were at Bid of 5 3/4, this effectively represented two market orders. I expected a quick execution. Nothing happened, though that 1 5/8 spread existed for most of the remaining trading day, according to CBOE. A call to Ameritrade yielded the following explanation: "There was no volume. No interest on the other side." My understanding was that market makers and specialists are under some kind of obligation to make a market, particularly when presented with market orders. I would think, that when MMs are presented with an opportunity to make the full spread on both sides of the transaction, they'd take advantage of it, hedging themselves if they felt the need (which they can do for just about no cost, right?). So I'm wondering why this didn't execute, and who I should address a complaint to, if it's a valid one. I printed out a screen showing the above prices a couple of times for evidence, should I need it. Thanks, Tuck PS Have a good 4th, y'all!

To: Herm who wrote (11141)	7/3/1999 1:51:00 AM
From: Jon Tara	Read Replies (1) \| Respond to of 14162

Somewhat OT - VIX (but has been discussed here quite a bit...) A question on VIX strategy... Looking at the chart of the VIX, and applying some of my favorite TA (which I'm not quite convinced yet will work on the VIX, but never mind...) I feel that it is about to turn. What I am REALLY not convinced of, though, is the supposed inverse relationship between the VIX and major indices. I note in looking at the historical chart, that the market seems as likely to rally from a VIX at this level as to tank. Yes, the market highs and lows are correlated with VIX lows and highs. The problem, though, is determining just what is THE high or low for the VIX for a cycle. The market seems to be able to rally from a low VIX, as long as it isn't THE low, and is able to tank from a high VIX, as long as it isn't THE high. Problem is, I dunno any way to determine, in advance, what is THE high or low VIX, any more than I can tell what is THE high or low price of a stock or index. :) I am interested in a strategy that will make money if the VIX increases, but is market neutral. The most obvious I suppose is a straddle. Straddles are normally expensive, and usually avoided for that reason. If one wanted to buy a straddle, now would seem to be the time. And if one IS convinced of the direction of the market (I'm not, though) now is the time to buy long calls or puts. Any other strategies that would take advantage of an increse in the VIX? (The idea thing would be a VIX call. Does anybody offer any such animal?)