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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: ajtj99 who wrote (51973)	4/16/2002 7:58:28 PM
From: ajtj99	Read Replies (1) \| Respond to of 99280

Put/Call ended at 0.64 today. Equity put/call at 0.51. If this gaps up tomorrow and gets some steam, we'll see these numbers get into topping range (0.50 for put/call and 0.40 for equity). VXN closed at the middle BB at 39.43. Lower band is at 35.26, which seems a bit out of reach. Does it reverse and go back up now, or head for the lower BB? stockcharts.com[h,a]daclyyay[dd][pd20,2][vc60][iUb14!La12,26,9]&pref=G VIX closed below the middle BB at 20.30 and could hunt for the lower BB at 18.83 before reversing up. Today's 9% spike in the VIX was pretty impressive, confirming the trend reversal. stockcharts.com[h,a]daclyyay[dd][pd20,2][vc60][iUb14!La12,26,9]&pref=G

To: ajtj99 who wrote (51973)	4/16/2002 8:30:54 PM
From: mishedlo	Read Replies (1) \| Respond to of 99280

Aj, I was asked by PM my definition of max pain. (with a specific question about NVLS) My reply. Max Pain is the point at which most options expire wortheless. attempting to apply Max pain to thinly optioned issues like NVLS RMBS SCON MLNM ets is futile. Max pain works on QQQ INTC CSCO MSFT more or less in that order. But if QQQ INTC etc is rising or falling that will determine market direction (more or less). QQQ max pain is 35 more or less INTC max pain is 30 CSCO max pain is 15 MSFT max pain is 60. When we were at QQQ 33 (either we were about to have a huge breakdown, or we were setup for a big rally). There were no other options. If we stayed below 33 delta hedging short would have sent us lower. By hook or by crook, 5 months in a row, we hit max pain during expiry week. If you knew we were headed up 100 Naz points would you have been short? The problem is, until yesterday evening, I had no idea whether it was up or delta hedged down. The safe bet is to ALWAYS ASSUME MAX PAIN WILL RULE ON QQQ and act accordingly. That would have been to lighten up on shorts and puts and if you could stomache it, go long. The problem is all the head fakes, just as it looks to be headed to the toilet, some miracle occurrs, like NVLS appearing to have good earnings. No doubt they guided higher a couple weeks ago (with a low ball estimate of beat by .01), then managed to lose money but beat the estimate again. Two rallies on the same horsesh*t news. That happens and is unfortunate. I believe they should immediately guide down by .20 (for which dip buyers will gladly suck up shares at the bargain basement price of $45, then they can beat easily by .05 next quarter after first guiding up by .01). A total sham. M