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Technical Analysis Fallacy

  • #46,381
  • May 30, 2014 9:06am May 30, 2014 9:06am
Quoting fti
{quote} wow vic, Flowing Rivers? Barry Gibbs style? regards

Out in Montana chief


no internet no tv no phone life is good


v
  • #46,382
  • May 30, 2014 10:35am May 30, 2014 10:35am
Quoting CookieMonsta
{quote} Hi trad8, is good to hone skill in 1 direction well before going into other areas. though this can be applied more successfully on indexes and low beta stocks that are not volatile, as the volatility in forex may not suit this method.

sue anything also can la.
only no susi, su hai su san, su ti is ok la.

regards
  • #46,383
  • May 30, 2014 10:38am May 30, 2014 10:38am
Quoting kinky
spread butter -> less friction

ya lor
hair no catch on fire lor.

regards
  • #46,384
  • May 30, 2014 10:48am May 30, 2014 10:48am
Quoting CookieMonsta
{quote} Hi trad8, is good to hone skill in 1 direction well before going into other areas. though this can be applied more successfully on indexes and low beta stocks that are not volatile, as the volatility in forex may not suit this method.
was just about to ask you, if you had written those butterflies at very high voli.
because if you ask me the CB making very high probability of blow off voli type markets ahead.

But now i can see what you mean.
You on equity opts so that one is bau.
bau chiak.

bau= sure
chiak=eat

i don't think any traders survived scalping that market short tenure yet.
only on indexes. Thats a possible direction. If the crazies hold depo rates so low for too long.
Thats only markets still viable for real investing.

If they want play the strong hand on the funds/money markets for too long, surely they going to have great time trying get peeps back if any walked away.
Any one start local tontin markets yet? I heard in china is big $ markets. They not trust too big to fails very much yet. Seems to me wise.


regards
  • #46,385
  • May 30, 2014 10:54am May 30, 2014 10:54am
Quoting indianguyinny24
{quote} Out in Montana chief no internet no tv no phone life is good v
Oh cowboy territory?
Wow.

Nice spring water. green pastures.
and no brains frying.
Just you and trusty horse and dog?
nice.....lovely way to live.

By the way what are you doing there?
why aren't you in concrete jungle with iron horse and all the califonia beach volleyballs.
holidays or secondment?


regards
  • #46,386
  • May 30, 2014 10:59am May 30, 2014 10:59am
Quoting fti
{quote} was just about to ask you, if you had written those butterflies at very high voli. because if you ask me the CB making very high probability of blow off voli type markets ahead. But now i can see what you mean. You on equity opts so that one is bau. bau chiak. bau= sure chiak=eat i don't think any traders survived scalping that market short tenure yet. only on indexes. Thats a possible direction. If the crazies hold depo rates so low for too long. Thats only markets still viable for real investing. If they want play the strong hand...
hi fti,

forex market too volatile and many news and things can move market too easily, so butterflies not good for it i feel,
since the low beta stocks and indices usually don't move in very huge spikes unless something huge is happening, but when earnings and news release can spike vols, so mainly need adjust for these factors,
also, algos, they causing vols to be much tamer for equities, so butterflies are much better here too
  • #46,387
  • Edited 12:18pm May 30, 2014 11:04am | Edited 12:18pm
Quoting CookieMonsta
{quote} hi fti, forex market too volatile and many news and things can move market too easily, so butterflies not good for it i feel, since the low beta stocks and indices usually don't move, but when earnings and news release can spike vols, so mainly need adjust for these factors, also, algos, they causing vols to be much tamer for equities, so butterflies are much better here too
yes , is true.
but the voli is where the big $ is for writing.
as you grow yo will learn build butterflies with very robust/versatile wings.
Just no strangles too much is ok, when in high voli places.(in high voli places , you need point the gun barrels, aim well, thats why need TA)
For equities, strangles is fool's gold. bau chiak yummy stuff. any fool can eat, because of mass dummys.

reminds me.
In land of the blind, one eye jack is king. or was it joe.

regards

by the way, i do not agree butterflies no robust in high voli.
In fact because is butterflies, they cannot see the sword, until they wondering, where's the blood coming from?
ever heard of no(zero) cost opts, is hedgers most powderful tool.
keeping things in boxes, let them expire worthless.
every one cannot see the eating. because already ate.eatened?

sorry bring everyone OT.
back cha cha.

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?????men's cha cha? where's the cha?
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ok back to woman chacha.
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belly cha cha? but i like the rhythm. cha cha mambo.
  • #46,388
  • Edited 2:41pm May 30, 2014 2:05pm | Edited 2:41pm
thru eyes of love.

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unbelieveable.
someone have this."rofl:

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regards
  • #46,389
  • May 30, 2014 4:06pm May 30, 2014 4:06pm

what a bubu?

yes trad8 your post of ding dong song is correct.
the Singer of the song is ChowCaichin.
Ai ya, i never heard her song high resolution before.
On my system sounded too bright.

so confirms, my ability recognise is become very very dull.
So sorry my friend.
why didn''t you tried corrected me.



regards
  • #46,390
  • May 30, 2014 9:26pm May 30, 2014 9:26pm
Quoting fti
what a bubu? yes trad8 your post of ding dong song is correct. the Singer of the song is ChowCaichin. Ai ya, i never heard her song high resolution before. On my system sounded too bright. so confirms, my ability recognise is become very very dull. So sorry my friend. why didn''t you tried corrected me. regards
Hi Chief,

Aiya,... correct or wrong, hi-rez or lo-rez, bright or neutral all not important
they are universal music everyone can appreciate

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Regards,

  • #46,391
  • Edited 3:30am May 31, 2014 3:13am | Edited 3:30am
Quoting fti
{quote} yes , is true. but the voli is where the big $ is for writing. as you grow yo will learn build butterflies with very robust/versatile wings. Just no strangles too much is ok, when in high voli places.(in high voli places , you need point the gun barrels, aim well, thats why need TA) For equities, strangles is fool's gold. bau chiak yummy stuff. any fool can eat, because of mass dummys. reminds me. In land of the blind, one eye jack is king. or was it joe. regards by the way, i do not agree butterflies no robust in high voli....
hi, fti

agree with you vols is where the money is at for writing options, but was thinking if writing deep ITM spreads on 1 leg of the spreads, while using the other leg to write another otm spread at maybe 2 times, to pay for the premium that is needed for the other side's hedged position.

example, the market rallied up and forms a double top, so i sell deep itm call, then i hedge by buying a call, maybe atm, or otm, and sell otm put spreads to help pay for the right side of the first spread, and may end up just paying commissions only if the trade doesn't work out.

wondering if this method is ok, since i am not just trading the premium, but also trading the intrinsic value at the same time, which can help pay for the otm hedging spreads?

then by inverting it and putting the opposite direction's version of the spread, i can catch the market either way, just need the momentum to the upside to come in, or the momentum to the downside to come in, otherwise i just get a little back from the time premiums.
  • #46,392
  • May 31, 2014 8:07am May 31, 2014 8:07am
Quoting trad8
{quote} Hi Chief, Aiya,... correct or wrong, hi-rez or lo-rez, bright or neutral all not important they are universal music everyone can appreciate http://www.youtube.com/watch?v=q_A5qGiWEqY http://www.youtube.com/watch?v=9AymT2OfV1A Regards,
most dangerous sickness 相思 is .
like the word says.
is a cage.
that cages the heart.

Heart is caged in time, no future, trapped in the past.
standing still in time.

and no instrument can detect the disease process.

regards
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  • #46,393
  • May 31, 2014 8:11am May 31, 2014 8:11am
Quoting CookieMonsta
{quote} hi, fti agree with you vols is where the money is at for writing options, but was thinking if writing deep ITM spreads on 1 leg of the spreads, while using the other leg to write another otm spread at maybe 2 times, to pay for the premium that is needed for the other side's hedged position. example, the market rallied up and forms a double top, so i sell deep itm call, then i hedge by buying a call, maybe atm, or otm, and sell otm put spreads to help pay for the right side of the first spread, and may end up just paying commissions only...
question is ,
does one knows how to manage the situation.
when ITM Stays deeper ITM and OM comes ATM?
thousands of songs.


regards
  • #46,394
  • May 31, 2014 8:57am May 31, 2014 8:57am
Quoting fti
{quote} question is , does one knows how to manage the situation. when ITM Stays deeper ITM and OM comes ATM? thousands of songs. regards
hi, fti,

correct me if my understanding is wrong, the OTM put credit spread has to be deep out of the money, and it has to have its higher strike at least below half of the original call credit spread's higher and lower strike, if that is the case, the intrinsic value should have gained enough for me to simply close it as a short position and forgo the premium, while if the price moves higher, the OTM put credit spread is still paying for the call credit spread, hence my p&l for these 2 is net $0 or about there, less commissions, and i can let them expire worthless, hence, if that is the case, i can manage it as a short underlying position instead of letting continue collecting time premium till expiry, so if the spot price moves the price of the put credit spread from OTM to ATM, it must mean that the ITM must have lost in intrinsic value, and hence i as the seller would be able to buy back the option at lesser intrinsic value, given the requirements that the OTM put credit spread has to at least have its higher strike at least half or lesser than half away from the distance between the ITM short call's strike and its ATM or OTM long call, which is near the money. if constructed correctly, it should be a plateau with no losses, at most break even.

please see if i understood it correctly.
  • #46,395
  • Edited 9:42am May 31, 2014 9:13am | Edited 9:42am
Quoting CookieMonsta
{quote} hi, fti, correct me if my understanding is wrong, the OTM put credit spread has to be deep out of the money, and it has to have its higher strike at least below half of the original call credit spread's higher and lower strike, if that is the case, the intrinsic value should have gained enough for me to simply close it as a short position and forgo the premium, while if the price moves higher, the OTM put credit spread is still paying for the call credit spread, hence my p&l for these 2 is net $0 or about there, less commissions, and i can...
only theritically correct if markets lost voli.

if voli high, you lost back all premiums + you exposed limitless loss posibilities.
So you still need TA be fortune teller.
but can always manage daily. cover your behind with boxes.
Brokerage very important factor. If hedged direct spot markets, no bro.

There pro ways manage these , but beyond scope of discussion here.
is too big.
need AT LEAST few hundred mio be effective.
Is no longer ants work, becomes microscopic.


regards
  • #46,396
  • May 31, 2014 9:55am May 31, 2014 9:55am
Cha Cha!
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  • #46,397
  • Edited 10:20am May 31, 2014 9:59am | Edited 10:20am
Quoting trad8
Cha Cha! http://www.youtube.com/watch?v=YX603CaOW1A http://www.youtube.com/watch?v=zdR9KGCjb0w http://www.youtube.com/watch?v=F4XjNOlhiq0
) chubby checkers? today need sweat.
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  • #46,398
  • May 31, 2014 10:24am May 31, 2014 10:24am
Harry Belafonte ?

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  • #46,399
  • May 31, 2014 10:37am May 31, 2014 10:37am
Quoting trad8
Harry Belafonte ? http://www.youtube.com/watch?v=AQXVHITd1N4 http://www.youtube.com/watch?v=6Tou8-Cz8is

wait i need on the compressor.
ai yo why i get so much helium leh?

regards
  • #46,400
  • May 31, 2014 10:41am May 31, 2014 10:41am
Quoting fti
{quote} only theritically correct if markets lost voli. if voli high, you lost back all premiums + you exposed limitless loss posibilities. So you still need TA be fortune teller. but can always manage daily. cover your behind with boxes. Brokerage very important factor. If hedged direct spot markets, no bro. There pro ways manage these , but beyond scope of discussion here. is too big. need AT LEAST few hundred mio be effective. Is no longer ants work, becomes microscopic. regards
hi fti,

thanks for the comment, i have been suspecting that the implied vols is the factor that may break this strategy, since it is the single variable in the black scholes that cannot be controlled, most others are either negligible, or can be neutralised with some strategy.

does that mean that we need to catch the implied vols when it spikes out of order, since implied vols usually are mean reverting from a TA point of view, when the markets get from a state of out of equilibrium to going back to equilibrium? also i was thinking if using the vols index, vix, to see if it is viable to perform vega hedging the portfolio, and try mitigate the premium loss through the vxx, but i think i need to study how vix are created and their correlation to options, to see if the vix itself is being used as the implied vols.
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