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Strategies & Market Trends : The Options Box -- Ignore unavailable to you. Want to Upgrade?

To: the options strategist who wrote (413)	5/17/2000 1:17:00 PM
From: Poet	Respond to of 10876

Hey JJ, I'm so glad you found us. <G> That's one of the best articles on volatility I've ever read. Thanks so much for posting it. It's a must-read for trading options in this kind of market. What struck me the most (aside the reminder that the VIX is based on the S&P) is that DIM calls provide better leverage that OTM calls under these conditions. Verrrrry interesting. I hope everything's going well for you. Please feel free to join in.....whenever.

To: the options strategist who wrote (413)	5/17/2000 1:27:00 PM
From: TradeOfTheDay	Respond to of 10876

JJ, thank you for the article- enjoyed it very much

To: the options strategist who wrote (413)	5/17/2000 2:45:00 PM
From: Eylon	Read Replies (1) \| Respond to of 10876

very good article but I'd like to point to one big problem with this part: > The Chicago Board Options Exchange Market Volatility {VIX} index has historically been an excellent barometer for the relative level of premiums that options traders have had to pay. The VIX gauges expected market volatility over the next 30 calendar days by combining the implied volatilities of eight S&P 100 Index options. Typically, a higher VIX translates into higher equity options premiums. The VIX chart below shows an extremely high relative VIX level from August through November 1998. This was a very difficult period to be purchasing options, as investors were getting leverage of four-to-one or less. Note also from the chart that the current VIX level, while not at the proportions seen in 1998, is still residing at one of its highest plateaus over the past three years. > (My bolding) As anyone know the time period of Oct 98 to Nov 98 was one of the absolute best time to buy option. The leverage was low but the market advances made it a great time to buy call and leaps options. The volatility is always high at the bottom, the problem is to identify this bottom. Eylon