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 : Tech Stock Options -- Ignore unavailable to you. Want to Upgrade?

To: Kevin who wrote (30140)	12/3/1997 2:43:00 PM
From: ViperChick Secret Agent 006.9	Read Replies (1) \| Respond to of 58727

okay brother bought 4 oexln I chickened out in buying any more. I am not buying big until a sell signal is hit. now lets see if that "light" buy program according to CNBC follows through.. Sister Lisa

To: Kevin who wrote (30140)	12/3/1997 7:38:00 PM
From: Patrick Slevin	Read Replies (3) \| Respond to of 58727

Hi. A head fake. It's not necessarily a head fake and it certainly is very real. With premium on options as high as they are a dive one way or the other crushes a buyer these days because premium gets stripped both on puts and calls in the indexes, as well as equities. Take GE ---I wrote GE Jun 70's at 6 around when the stock was 69. The stock is 73 a week or so later and the market is 6.75 by 7.25 Alright....bad example, perhaps. But I could buy in the calls for a loss of 1.25 while netting a gain on the stock of 2.75 -- Not exactly a windfall for the guy who bought the options. Sure, the leverage was neat, making over 20% net but let's move over to OEX. On the OEX, the old adage is amateurs buy the open and professionals sell the close. That is to say that the pros know that the market is going to open up or down. The options are priced accordingly. As I'm typing this, I recall lisa told me you trade OEX all the time, so I sense I'm too basic....but bear with me anyway. I'll take heat for being a know-it-all later if necessary. So think about it. The OEX closed up about 2 bucks at 468.20. The OEX 465 puts closed down 1.62, the 470s down 1.75 The OEX 465 calls are flat and the 470 calls are off 0.25 Who won? Certainly no one that owned either. lisa tells me you have a mechanical method that works well for you to day or position trade OEX. Personally I cannot do that. Without checking, I'm going to guess you have bad trades on inside days. Because inside days eat premium. When you have a trending day you certainly make out well if you are on the right side. To get back to the original question....which I suppose I've avoided because there is no fast answer....I have to say that it's feel. Mechanicals work well for some and not for others. "One man's meat is another man's poison" and so on and so on. For me, anyway, developing a sense for intraday trend and why it is or is not an aberration in the sense of running stops as opposed to a true turn precludes predetermined mechanically generated exits. I cannot explain how to watch certain things like PREM. It requires practice. I was taught by someone who can backtest PREM moves all the way back into the '80s. On balance it does provide clues but no computer (yet made) is going to tell me to sell here or buy there. Even I sense that this conversation comes across as rambling....but that's because this must be conceptualized....the rules are not easily put on paper, or computer as it were. Okay....just checked 10:21 EST this morning. Sell Programs came in as the PREM dropped to 0.35. The SP7Z dropped over 2 points shaking out shorts and by 11 was higher. Immediately after the 10:21 drop in the PREM it returned to FV and the market bounced. Just a sell program to run the longs. Now look at PREM on Monday. Trended up all day. Was as low as 0.91 early in the day but got above 2 after 12 and never looked back....trading much of the time above 3. I don't know what you or anyone else did Monday but if I was short going into the afternoon I would definitely have closed out the position based on the the bullish trend in the PREM alone. The SP7Z was dragging the market up and there was no stopping it. Agree or don't agree, I do not dispute how you or others may see it that's just the way I trade it, For Whatever It May Be Worth to anyone.