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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (1472)	12/12/1998 9:04:00 AM
From: donald sew	Read Replies (3) \| Respond to of 99985

Haim, >>>>> Also the pricing of option in general are anticipatory e.g. if a turn in certain direction is sensed, the premium changes sharply accordingly. Those changes had helped me to guess movement in stocks many times. Is this phenomen present also in index option? <<<<<<< I feel the premium changes in index options are more pronounced than in stock options, but thats just an opinion not based on any research. Depending on the index, I have seen huge swings in the premium and the spread, such as the spread on an OEX option jump immediately(within seconds) from 1/4 to 1/2 and on an NDX option from 2.5 to 4. Those huge swings are normally when the turn has been made. Leading up to a turn I have noticed more subtle changes. Seeya

To: Haim R. Branisteanu who wrote (1472)	12/12/1998 9:38:00 AM
From: Roebear	Read Replies (1) \| Respond to of 99985

Haim, I am going to respond to your question in anticipation of the education I may receive in responses, rather than any attempt at being other than a student here. I am not an options expert and have dabbled in index (OEX) options mostly to my pain not gain. So I tried a different tack. Yesterday I did the opposite of what you are talking about, playing OEX puts and checking a basket of stocks that I thought would show direction to the index. Basically I watched the stocks on 1 and 5 min charts and used MACD and especially Williams R to get the feel for where they were headed. Then I would watch how the index reacted. Basically I was in the OEWXN AM and out by 2:30pm, a little early (+2 pts vs 2 1/4 possible my basis) but the hairs on the back of my neck was saying there might be a little speech by someone like Big Al in October (those neck hairs saved me a real haircut then by 15 min). Said index rousing speech was supplied by WJC around 3:30. The option premiums dwindle whenever there is a pause in the indexes fall (puts) or rise (calls), anticipating a reversal. Now that is likely simplistic but it is just my observation. The index options move very quickly and it is best to sell a bought put or call just before it reverses rather than after the index has bottomed or topped. I was watching the stocks to tip the move in the index, exactly the opposite of what you are thinking of doing, but I guess it is a two way street. I am very interested in any comments. Just don't try to talk me out of my "nape" indicator, I'm keeping it! Roebear