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

To: thebeach who wrote (838)	2/23/1998 7:14:00 AM
From: Porter Davis	Read Replies (1) \| Respond to of 1598

People in action....acting like people. Actually, a friend of mine a long time ago described the entire market as that. The banks have been very volatile lately, and it's just human nature that people 'chase' the market--paying way too much on the upside, and pounding prices down if they sniff a pull-back. You have to understand that when things get thin on the upside, it's because the pros have sold all their longs and gone short, and cannot afford to sell any more, so the premiums expand until sellers can be found. Meanwhile, they continue to lose money until (if) the market turns. Another point to consider is that the banks' options are all called by different specialist(s), with different trading styles, outlooks, capital, and even experience. The fact that all the banks' implied volatilities fluctuate the way they do is just proof that no one is bigger than the market--no one can manipulate prices, much as the public might like to think so. Remember, if you think something's too expensive, sell it. If you think it's too cheap, buy it. That in a nut-shell is what I try to do to make a living. It ain't easy. Happy trading. Porter (Thanks to all of you who wrote to ask where I was and if I was OK. I was very involved in packing my 15-yr old daughter off to Calgary to live and train as an ice dancer. Seems like I was just changing her diapers... Then of course there were those 2 AM hockey games during the Olympics...) (And hey, who of you in Edmonton was it who went to the TSE marketing road-show and asked 'where's Porter, I thought he was head of Marketing for the TSE?' I about fell off my chair laughing when they told me that!)