Seeking Alpha

Jeff Pierce's  Instablog

Jeff Pierce
Send Message
I’m a swing trader of momentum stocks with a holding period of anywhere from a few hours to a few months. I run a number of screens to locate the strongest/weakest stocks out there, using technical analysis to determine my entries and exits. Trying to calculate the intrinsic value of stocks in... More
My company:
tradewithZEN
My blog:
zentrader.ca
  • How To Track Option Prices 0 comments
    Apr 4, 2014 7:39 AM

    By Christopher Ebert

    Question for the Option Scientist: What are you using to track option prices?

    Answer: Obtaining the price, or premium, of an option can be both difficult and expensive. That may be surprising to some, as there are so many financial sites that provide free viewing of option chains. But, most option chains only provide current premiums for options that have not yet expired. Since my weekly analysis requires historical premiums for options that have already expired, typical option chain data is not helpful.

    As an example, here in April 2014, it is nearly impossible to find free information regarding the premium of an option with a January 2014 expiration, let alone the premium on a specific historical date, such as December 12, 2013. There are services that compile such information, but the fees can be prohibitive.

    Instead, I use several mathematical formulas that I originally developed as a means of evaluating the fairness of option premiums. These formulas generate hypothetical option premiums which are almost always at or very near the actual premiums.

    Since the formulas provide hypothetical data, I use them not only for determining historical premiums for options that have since expired, but also for determining the premiums at which options would have traded if they existed.

    For example, the April 4 weekly expiration likely had not been introduced for trading way back in December (weekly expirations are typically not introduced more than a month or two before expiration day). Even so, the formulas can determine what the premiums would have been.

    The preceding is a post by Christopher Ebert, co-author of the popular option trading book "Show Me Your Options!" He uses his engineering background to mix and match options as a means of preserving portfolio wealth while outpacing inflation. Questions about constructing a specific option trade, or option trading in general, may be entered in the comment section below, or emailed to OptionScientist@zentrader.ca

    twitter

    Related Options Posts:

    Last Week's Brick Wall For S&P No Surprise

    Brick-Wall Resistance May Develop Soon

    Clocks, Stocks, Options Ready To Spring Ahead

Back To Jeff Pierce's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.