Not even close to a bottom! | Page 2 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Volatility Close to Close Method indi? 0 replies

NY Close vs GMT Close 6 replies

How to close order on BAR close? 6 replies

Need help!! Close order on this bar close 5 replies

Seeking Correct Open/Close - It's Close but ... 0 replies

Attachments: Not even close to a bottom!
Exit Attachments

Not even close to a bottom!

  • #21
  • Mar 26, 2009 2:26am Mar 26, 2009 2:26am
Quoting Rabid
Sigh. Thanks for the criticism. Since you don't feel like clarifying, maybe Gamma will.

But just for the record... I said the following:
1. Options come with a volatility (via current price and a pricing model) built in.
2. Otherwise, why write them?
3. Implied volatility is the expected level of motion.
4. Strike price is a function of the Black Scholes equation.
5. Realized volatility is what actually happens (or happened).
6. It's hard to make money if price doesn't move to cover the strike price.
7. A straddle is a bet on volatility.
8. A straddle...
You are indeed hoping that the volatility will increase but you are not making your gain on the volatility itself as usually anyway this is priced in allready. You are making your gain on the difference between the put and the call.

When you take a straddle, it is a bet that the price will move in a direction or another one but you dont know which one (for example when price reaches a major yearly resistance it can either bounce back or pierce and continue)

In this case, you lose on one of your option and gain on the other but the expected pay off comes way after the strike price is reached.

http://i.investopedia.com/inv/dictio...s/straddle.gif
  • #22
  • Mar 26, 2009 2:45am Mar 26, 2009 2:45am
Quote
You are indeed hoping that the volatility will increase but you are not making your gain on the volatility itself as usually anyway this is priced in allready. You are making your gain on the difference between the put and the call.

Thanks for the reply. If you're working with a single option side, wouldn't you make money only if price exceeds the strike price? And for that to happen, doesn't price need to move more than expected? I mean if price moves only 1 point, and that doesn't cover the strike by expiration, the option is worthless isn't it?

I know that when an option is written it's done w/ a volatility. Over time the "implied volatility" of the option changes based on price, but the volatility that the option was written on hasn't changed has it?

Quote
When you take a straddle, it is a bet that the price will move in a direction or another one but you dont know which one (for example when price reaches a major yearly resistance it can either bounce back or pierce and continue)

Nod. Has to move enough to cover the premiums of both options, doesn't it?

Quote
In this case, you lose on one of your option and gain on the other but the expected pay off comes way after the strike price is reached.

The risk being that price doesn't move at all, or just continues to range. Naturally if you're expecting the price to range then you could sell options rather than buy them.

Quote
So what does anyone think about the vix? We've had a good sized rally but the vix hasn't taken out the 40 level yet...i know this rally has been on some volatile moves but i expected the vix to fall more than it has considering we're up what 25% from this most recent short/mid term bottom.

People are still very emotional. It's emotional one way, then the other. Right now it's emotionally bullish, but there's no logic behind any of this. It's "Oh it moved up, quick, buy!" It's a cat chasing a laser pointer. I keep telling people that this is behaving like a temporary run-up before another fall. But of course nobody knows until we get confirmation one way or another.
  • #23
  • Mar 26, 2009 3:07am Mar 26, 2009 3:07am
I see we are right up against some major resistance. I would certainly not be buying into this level. Notice we have lower lows and increased volume on down side moves and volume decreases as we approach the resistance area on both indexes. This would suggest there is little interest in pushing through resistance. I am not believing this rally at all.

I would like a more recognizable bottoming pattern and I think because of these reasons we are headed back down, unless something drastic changes.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: ScreenHunter_069.jpg Size: 94 KB
Click to Enlarge Name: ScreenHunter_070.jpg Size: 87 KB
  • #24
  • Mar 29, 2009 6:07am Mar 29, 2009 6:07am
This failure to raise above S/R is a global thing. I believe we are soon headed down for new lows, based of the position of these indexes. If we zoom in and take a closer look, we can see that this rally has been on lessening volume on every major index. and the price has diverged from the volume.

Every time we have come close to S/R the volume has been light and there has been a complete failure for the effort to push through.

Notice the Dow 20 (transports) the usual leader has not even reached the S/R

I still am not a buyer and soon will consider selling hard into this, unless something changes quickly, like within the next day or so. We are at the Apex right now and the first part of this week will be the key.

My outlook is BEARISH.
Attached Image (click to enlarge)
Click to Enlarge Name: ScreenHunter_010.jpg Size: 65 KB
Attached Images
  • #25
  • Last Post: Mar 29, 2009 8:25am Mar 29, 2009 8:25am
This latest surge against the dollar is only temporary. Oil will fall in price. The majors will fall against the dollar and I will be stockpiling all sorts of basic goods(just bullets really). The economic collapse has not even happened yet. I will miss this forum and Forex and , most of all , I will miss when people used to treat others as people. Good luck all.
FF = Forex Faggots
0 traders viewing now