This is JB's Typepad Profile.
Join Typepad and start following JB's activity
Join Now!
Already a member? Sign In
JB
Recent Activity
Hi Mark, Sometime ago I think I recall you mentioning (writing actually) that with the fast moving and volatile market we've been seeing over the past several years that it is necessary to continuously monitor one's positions when the market is open. I tried several different search methods but could not find anything. Am I imagining this? And/or is it something you would agree with as necessary condition for sucessful option trading? All the Best, JB.
1 reply
Hi Mark, Thanks for the thoughtful and useful response. Actually, you always do respond and they are thoughtful and useful-- this trifecta, if you will, is not often seen, especially on the web. Thank you for it. I'm not sure I understand in your response item #6, in Delta Neutral Stock Replacement thread. If IV is low, there is unjustified complacency in the market, as I understand it, and accordingly the market and the stock are vulnerable to a decline. Buying puts or put spread. (I am meaning the spread is buy higher priced put sell lower priced put) is best done in a low IV environment and has the built-in stop-loss mechanism of limiting the loss--obviously to the amount paid. I thought this was a strong point in Josh's method. Would a call spread (sell higher priced, buy lower priced) be of less concern? What are some good and simple ways to play the "low IV, expect a decline in the underlying asset senario" I am making the assumption that a market decline is almost always accompanied by a rise in IV. Is this a bad assumption - one that is likely to "bite" me? I know that for the most part selling spreads has better overall outcome ( outcome = expected value (x) gain/loss) but I am thinking of this methodolgy as an insurance type of play and one pays for the insurance. Thanks. And all the best, as always. JB
1 reply
Hi Mark, I have thought about the idea Josh has brought up. What I've wondered is that since I would purchase the calls (itm delta 80 or so) on a down day for the stock and the VIX and IV for the option would be high. I think I would want to be selling, not buying, at a high IV time. So this would imply selling a put spread ( credit spread) which of course limits the upside. So, the question in all this is: How does one decide if IV is too high to do the call purchase? I am thinking more of 2 to 3 months till expiration. Thinking out loud. Since one would like to sell high IV and buy back cheaper at low IV, this seems to imply using puts. When IV is high, sell puts and buy back at lower IV. When IV is low buy puts and hope to sell at high IV. The results of this "Thinking out loud" is to use puts and not calls, if the logic in the first sentences of this paragraph is accurate. Love the blog ( unfortunately I don't get to read it everyday--(working stiff) and your teaching via the blog. I also add a personal recommendation for your books for anyone reading this. All the best. JB
1 reply
Hi Mark, Yes that makes sense. Just have to remember that to own: put = buy higher strike, sell lower strike (same exp. date) Call = sell higher strike, buy lower strike Thanks.
1 reply
Hi Mark, In the term (as in terminology and not a length of time) "own 10 RGTO Dec 80/90 call spreads" don't you need to identify which strike is long and which short? You could also identify it this is a credit or debit spread or a bull/bear spread and infer the long and short strikes, but I would opt for the most specific statement. Or, is the first strike always the long side? All the best and thanks for sharing your knowledge. This is a GREAT blog! You provide a real service. JB
1 reply
Greetings Mark and Happy Holidays to you and your loved ones! “If you told anyone that you bought a November out-of-the-money bullish call spread on AAPL at a fifty-cent debit - that person would clearly understand what you were telling him.” I’m not sure I agree with “clearly understand”. I maybe over-killing this but to me the clearest statements are: To Open: Buy 20 AAPL Nov 240c / Sell 20 AAPL Nov 250c To Open: Sell 20 AAPL Nov 240p / Buy 20 AAPL Nov 250p Where small c & p after the strike price represent call or put respectively. Happy Holidays and thanks for the books, blog and other education items. JB
1 reply
Monkey finally left Yahoo and appeared, for a short while, on ET. I haven't seen any posts from him for probably a month or so. Thank goodness. He certainly destroyed the Yahoo board. All the best to you. JB
1 reply
Hi Mark, "post insulting replies" ala Monkey. Keep doing your good work. Please. All the best. JB
1 reply
Hi Mark, Thanks for this and all the posts. This one reminded me-- A smart man learns from his mistakes. A wise man learns from the mistakes of others. All the best, JB
Toggle Commented Aug 12, 2009 on My Story and Risk Management at Options for Rookies
1 reply
Hi Mark, In regards to the quizzes, some would find it helpful to have a companion workbook with several/(many??) problems for each chapter, especially the Greeks. The original email for this posting to you was in the scope of the greeks. For a working stiff, limited time to watch the market, and familiar with owning stocks, it sounds like the collar is recommended. A question comes to mind — how far out should the insurance side (long put) be? I know there is no RIGHT answer, but your thoughts would be appreciated. To add a little context, assume the investor would like to hold the stock for several years. Buy puts when they’re cheap—vix is low?
1 reply
Hi Mark, Your explanations are clear and include enough detail. Many of us need to read several times and then work several examples. I know you include a Quiz at the end of each chapter in the Rookies Guide … Even with this, the real market moves so fast that it is easy to just wait one more day and see what happens and then another day and another etc. I find I can set a good-till-cancel order on the winning side of spread but when the move is against me is when I have trouble. By the way, I was under the belief that it was almost always better for the option owner to sell the option rather than to put the stock to put seller (me). I seem get stock put to me when make the wrong play. Any comments on when or why put owners put the stock instead of sell the put? FWIW - There is no such thing as too much detail or clarity. All the best. JB
1 reply
Hi Mark, Does VIX have the "fat tails"? If so, wouldn't VIX move more than two standard deviations about 5% of the time? Cheers, JB
1 reply