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Stating The Obvious and The Quest For Wisdom

  • #601
  • Mar 16, 2010 10:19pm Mar 16, 2010 10:19pm
Looks like all the "invisibles' showed up.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #602
  • Mar 16, 2010 10:23pm Mar 16, 2010 10:23pm
Quoting Darkstar
There stops are immaterial. There probably defending a 100m option. Defending a 30 pip buffer, they can afford to commit up to 33 yards defending it before the defense costs them more then they would save with the option. They likely aren't committing that much (or anywhere close). I'd guess they have 4 or 5 yards committed to the task..
The only thing I'm looking at is a 5min chart. .....
u always only look at 5minute charts?

u mentioned yards committed to a 'task'. is there a set minimum & max values, in yards, that these players commit to such tasks?
is there a way for us to detect if 'defense costs' is bigger/smaller (in value) than the option itself?

Quote
.4 or 5 yards committed to the task...
what made u think 4 or 5 yards?

Thanks!
  • #603
  • Mar 16, 2010 10:23pm Mar 16, 2010 10:23pm
Quoting Darkstar
I cant find the post but someone mentioned IFR has a soverign selling euro at these levels. Thats strait up BULL SHIT. Why would a soverign step in here? If anything, soverigns like stability and were moving back INTO the longer term range. This is nothing more then whoever is defending the option (or some other player cought short) trying to keep longs on the sidelines.

IFR is great, but you still need to use your head.
Na not IFR haven't checked them over last couple days. It's rumored sovereign but yeah doesn't make sense but definitely sell interest there.
  • #604
  • Mar 16, 2010 10:24pm Mar 16, 2010 10:24pm
Quoting Deusomega
33 yards!?! I thought yards were billions..
Yards = Billions

And yes that on a 100m option. a $1m position held for 30 pips = $3000.
100m / $3000 = 33,000.

Anyone find a rumor on the size of that option?
  • #605
  • Mar 16, 2010 10:24pm Mar 16, 2010 10:24pm
Quoting Deusomega
33 yards!?! I thought yards were billions..
that makes it 1 billion x 33.
  • #606
  • Mar 16, 2010 10:26pm Mar 16, 2010 10:26pm
Quoting Darkstar
There stops are immaterial. There probably defending a 100m option. Defending a 30 pip buffer, they can afford to commit up to 33 yards defending it before the defense costs them more then they would save with the option. They likely aren't committing that much (or anywhere close). I'd guess they have 4 or 5 yards committed to he task. Once they lose the 100m on the option, doing anything else is just throwing good money after bad. Their stops are hiding just beyond the option strike...



The only thing I'm looking at is a 5min chart. You can...
Are you talking about the stops that are tied to their defensive short trades? So they are trading with $330K pips? Holy smokes. They end up losing 200M If they are wrong. Is this correct DS?
  • #607
  • Mar 16, 2010 10:28pm Mar 16, 2010 10:28pm
Quoting Darkstar
Yards = Billions

And yes that on a 100m option. a $1m position held for 30 pips = $3000.
100m / $3000 = 33,000.

Anyone find a rumor on the size of that option?
Oanda's IFR title: Eur/usd: sellers ahead of 1.38 cap - but short getting nervous @ 2:49:00 PM now says NO NEWS FOUND. It had text in there a few minutes ago.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #608
  • Mar 16, 2010 10:29pm Mar 16, 2010 10:29pm
Quoting Deusomega
I think the current COT stats give a lot of credence to what DS was saying about the scared money leaving the euro 1200-1300 pips ago. I read today that the greece bailout will likely go through and the COT looks pretty extreme bounds right now in short exposure. Wonder when it will turn .
It could also be that it's open intrest from the higher prices where the traders are just willing to hold their shorts because of the longer term bearish outlook.
  • #609
  • Mar 16, 2010 10:30pm Mar 16, 2010 10:30pm
Quoting Darkstar
Yards = Billions

And yes that on a 100m option. a $1m position held for 30 pips = $3000.
100m / $3000 = 33,000.

Anyone find a rumor on the size of that option?
Thanks I see what you mean now.
  • #610
  • Mar 16, 2010 10:35pm Mar 16, 2010 10:35pm
Quoting Darkstar
I...
IFR is great, but you still need to use your head.
IFR + brain neurons (learning, practice, experience): is that good enough?
or do u need something more?
  • #611
  • Mar 16, 2010 10:37pm Mar 16, 2010 10:37pm
Quoting supremeChaos
IFR + brain neurons (learning, practice, experience): is that good enough?
or do u need something more?
The more the merrier. lol
  • #612
  • Mar 16, 2010 10:39pm Mar 16, 2010 10:39pm
On the defense math look at it like this... $1,000,000 position = $100/pip.

Now pretend you have $100m on the line with that option. How much money would you be willing to commit to saving that $100m?

My guess is 10-15% of the option value, so $10-15m.

Divide that by the number of pips you want in your buffer ahead of the option and you can get an estimate of size.

30 pips at 15% of 100m would give you 5 Yards of operating capital for defense. It may be more or less, but if I was trading it thats what I would want....

(and yes Scotty, thats 500k per pip)
  • #613
  • Mar 16, 2010 10:41pm Mar 16, 2010 10:41pm
Been some excellent recent posts DS much appreciated!
  • #614
  • Mar 16, 2010 10:44pm Mar 16, 2010 10:44pm
Very cool stuff Darkstar. No wonder the options data gets leaked. It's the bank or the holder of the option. This brings another question to mind...How many options are successfully defended? I'm just curious because if most of them become prey and lose then I don't understand why people purchase them. I know there was a large one down at 1.3 a while back, but we never made it anywhere close to that number.

Also, if anybody knows. When does this current option expire?
  • #615
  • Mar 16, 2010 10:50pm Mar 16, 2010 10:50pm
Quoting Darkstar
On the defense math look at it like this... $1,000,000 position = $100/pip.

Now pretend you have $100m on the line with that option. How much money would you be willing to commit to saving that $100m?

My guess is 10-15% of the option value, so $10-15m.

Divide that by the number of pips you want in your buffer ahead of the option and you can get an estimate of size.

30 pips at 15% of 100m would give you 5 Yards of operating capital for defense. It may be more or less, but if I was trading it thats what I would want....

(and yes Scotty,...
Thanks darkstar. I'm an idiot. Somehow I failed to multiply 333K by 30. It's 500K/pip though because you have to go by standard million dollar lots on the interbank i.e. no funny oanda type granularity. I think thats right.
  • #616
  • Mar 16, 2010 10:54pm Mar 16, 2010 10:54pm
Quoting Scotty B
Thanks darkstar. I'm an idiot. Somehow I failed to multiply 333K by 30. It's 500K/pip though because you have to go by standard million dollar lots on the interbank i.e. no funny oanda type granularity. I think thats right.
I was correcting myself here BTW, not you DS.
  • #617
  • Mar 16, 2010 10:57pm Mar 16, 2010 10:57pm
Quoting Scotty B
Very cool....I know there was a large one down at 1.3 a while back, but we never made it anywhere close to that number.
..
Sir Scott,
eur$? when was this?
Thanks!
  • #618
  • Mar 16, 2010 10:58pm Mar 16, 2010 10:58pm
I don't know how this option thing will play out through London, but I just want to throw out that there is a lot of money sitting at the 1.3755 zone. I could definitley see buyers come in strong off that level to break this range.
  • #619
  • Mar 16, 2010 10:59pm Mar 16, 2010 10:59pm
well.. its mission acomplished for this stage of the game.. we got a higher high and a higher low. Now well get a pullback while the hunters free up capital. Things will pick up again ~3:30am est with another up move. London open will take us through the barrier and into the stops.

The hunters will liquidate into the stops at ~1.3805, but given the level of defense we've seen, I wouldn't be surprised if we drive up into the next level of resistance. As has been pointed out, the market is caught short and the pullbacks are going to be shallow. No sense letting the losers out easy.

We'll revaluate in the morning to see what happened, but at this point I'm feeling pretty good about my long...

Night all.
  • #620
  • Mar 16, 2010 10:59pm Mar 16, 2010 10:59pm
Quoting Darkstar
On....
My guess is 10-15%...
is there any possibility/instance that they allocate more than 10-15%?
if yes, do u know why?
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