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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jack of All Trades who wrote (1907)	5/31/2000 6:42:00 PM
From: Defrocked	Read Replies (2) \| Respond to of 33421

Regardless of what model you use, the fair value is determined by where the pit trades the option. The price is an almost instantaneous balancing act between supply/demand, basket arbitrage conditions, put/call arbitrage and quasi-arb spreads with futures. The pit is "staffed" by well-capitalized traders whose main job is to "warehouse" volatility while beating their financing costs consistently over time. Just try to execute an arb using those quotes and you'll see that it can't be done at a profit off the floor. There's no arb there and the only info it imparts is that your service is screwed up.-s- Sorry if this post sounds pompous, but I just didn't want you to employ/interpret data that has to be erroneous. (I mostly use Bloomberg along with other info providers.)