Condor Options

CME Group Making Gold Options More Tradeable

No, this would not make gold options "even more volatile." Historical volatility is a function of changes in the price of an asset. Implied volatility is a function of expectations about future price changes. Neither is a function of the number of strike prices available for trading on an exchange.

You probably suspect banks are "smugly laughing up their sleeves over this change" because you are a conspiracy theorist and/or because you have misunderstood fundamental aspects of the options market.

I fail to see how buying gold would "end" whatever it is that is "terribly wrong in our country."

On Oct 02 12:53 PM The Recusant wrote:

> Would not this make gold options even more volatile? Why do I suspect
> banks are smugly laughing up their sleeves over this change?
>
> There is something terribly wrong in our country. End it...buy gold.

Weekly Volatility Tracker: All That Glitters Is Volatile

Given how new those products are, I think it would be a bit hasty to draw such sweeping conclusions at this point. I don't trade VXX or VXZ since I have access to the CBOE volatility futures. But I disagree with your claim - evidence so far suggests that VXX does track its target range quite well.

Remember that the "real VIX" (if by that you mean the spot VIX) is just a statistic and is not directly tradable.

Weekly Volatility Tracker: Implied Correlation as a Reflation Proxy

For annualized realized volatility: calculate the standard deviation of log returns over the period required, multiplied by the square root of 252. This can be done easily in a spreadsheet.

Weekly Volatility Tracker: Implosion in S&P 500 Volatility

Thanks, Alex.

VIX tracks 30 (calendar) day implied volatility, and can be lagged and compared to the 21 (trading) day realized vol. There isn't a 60-day version; the 90-day implied index, VXV, is certainly worth watching, but I haven't added it to chart #5 since it might make things a bit too crowded. The ratio of VXV and VIX is tracked in chart #8, what I'm calling the "VIX Premium Ratio."

Why Do VIX Futures Remain High?

conceptwizard: By "that VIX level" are you referring to the spot VIX, or VIX futures? Of course spot VIX can change quickly, and I don't think anything in the post contradicts that fact. Long-dated VIX futures tend to change slowly.

On Jul 30 08:43 PM conceptwizard wrote:

> I'm not on board with this one. That Vix level can change drastically
> overnight with a bad breeze and will in my opinion.

Iron Condors and Vertical Skew

Thanks.

Bloomberg's 'So-Called' Financial Lexicon

So you think put options are just as "exotic" as CDS, CDOs, etc.? Sorry, that's just a bizarre view. Options have been traded on the CBOE since 1973; CDS didn't even exist until the 1990s, and the CDS market didn't blossom until around 2000. If you're familiar with either category - vanilla exchange-traded options or structured finance - it's apparent that there's nothing exotic, professional, or unusual about calls and puts when compared to bespoke derivatives and products that institutions trade with themselves.

I like how you bring in ominous legal jargon there at the end and tie things up with a nice ad hominem attack. Classy.

Bond Market Leadership

Also, the quote from Brett Steenbarger didn't get formatted properly when transferred from the blog: his quote ends with "...over more speculative alternatives."

Bond Market Leadership

The chart was moved - it's the chart above that text.

Bloomberg's 'So-Called' Financial Lexicon

RogerOD, I'm not sure I understand what you're saying. Are you saying that the vernacular of a typical reader of an article about options doesn't include "put option"? I suppose you'll also argue that a typical reader of science journals won't have heard of "planetary opposition"? And the readers of Roll Call won't have heard of the filibuster?

I fail to see how your view is tenable, or even remotely plausible.

On Jul 20 04:46 PM RogerOD wrote:

> so-called "torque foot," so-called "planetary opposition," so-called
> "harmonic third." the postulate that "put option" is any more empiric
> than any of these usages is typical of someone promulgating a vernacular
> meant to confuse suckers, ie options salesmen. my point may not
> be a priori correct but it is tenable, and that fact makes the amount
> of ink spilled above and the manner in which it is spilled totally
> absurd.

The Lazy Guide to Delta Hedging

If your goal is to trade volatility (i.e., to be an options trader, rather than a stock picker just using options for leverage), but delta hedging isn't practical yet, risk-defined option spreads are a good intermediate step. We teach strategies for trading iron condors (short volatility) and calendar spreads (long volatility) in our paid newsletters.

The Lazy Guide to Delta Hedging

The best way to get practical experience trading options is just to fund an account and trade options. Keep a journal of every trade you make including all the relevant data (time, price, volatility, greeks, etc) but also the thought process and rationale for each trade. Also, keep trade sizes excruciatingly small until you're comfortable risking more. Some people paper trade first; that's fine, but it's no substitute for having real capital at risk.


On Jul 14 06:33 PM mbogosi wrote:

> Say what if I told you I've read Natenberg and some other various
> literature on the topic of Options trading. I just picked up the
> book you mentioned in your article. I've been studying options heavily
> and really would like to trading a career. How would be the best
> way to get some practical experience trading options and use some
> of the skills I've learned?

Bloomberg's 'So-Called' Financial Lexicon

Thanks. We don't want to be so critical as to make the cause of reform look hopeless.

Have Treasury Yields Moved Too Far, Too Fast?

Unless your time frame for that $200 TBT target is within the next few months, nothing in your comment is inconsistent with the trade profiled here. Thanks for the comment.

Monday Equity Volatility Report

The implied volatility indexes covered here already serve precisely the function you describe. They state an annualized 30-day implied volatility (forward-looking) for the asset in question, within one standard deviation.

VXV, one of the components in my VIX Premium Ratio, tracks a similar three month estimate for the S&P 500.