rayman

Tuesday's Options Recap: Risk Perceptions Fall Sharply

I need to due some more delta neutral (well - *kind of* trades. Doh, one more thing I thought of (of course). 50 shares of stock - then of course get 1 put. Same math I guess as 2 puts, but if the stock is expensive, simply keep the same ratio. If you like the stock, buy more on weakness or strength, rinse, lather repeat and if you make gains, try to use some of those gains to purchase another put. Could be really good for momentum stocks, and also very good downside protection.

Tuesday's Options Recap: Risk Perceptions Fall Sharply

The delta neutral also sounds similar as well to this method: www.theoptionsguide.co... that I like as well. Good notes, keep up the great work! Seems almost worthwhile these days to get 2 puts against a position esp. if they get cheaper.

On Mar 11 10:31 AM Frederic Ruffy wrote:

> Thank you for the comments. Sounds like the KIE calls are working
> out well for you Rayman.
>
> One clarification to the comment: "something like 80% or more of
> all block option trades are delta neutral".
>
> Delta neutral implies that a position is perfectly hedged. For example,
> 100 shares of stock, which have a delta of 1.00, can be hedged with
> two puts that have negative deltas of -.5. This results in a position
> delta of 0 or delta neutral.
>
> Over the 15+ years I have been active in the options market, including
> on an institutional trading desk, I can tell you with certainty that
> 80 percent of block options trades are not delta neutral. Options
> trades are initiated by buyers and sellers for a variety of reasons--sometimes
> to hedge, sometimes to speculate. True, a lot of the activity is
> tied to shares, but it is often on positive or negative deltas.<br/>
>
> We monitor the activity throughout the day and write about the most
> interesting and noteworthy activity. Whether or not you feel it has
> predictive value is up to you, but consider a recent example from
> Friday--a surge in call activity in Schering Plough that occurred
> before the takeover announcement Monday. This was not a coincidence.
>
>
> If you want to find out more about the tools we use and how we track
> the activity, we have a FAQ section on our web site that addresses
> many of those questions.
>
> Good trading!

Tuesday's Options Recap: Risk Perceptions Fall Sharply

lol, out KIE calls....probably saw em on your site *wink* *wink*
150% return on the squeeze Fred...held for a few days I believe, but wish I kept my IBM/UYG calls, phenomenal day

I ike the notes on Delta Neutral Fred.
I went Delta neutral on EFA (well kind of) with a 33 strike straddle on the front month today. A wee bit upside, but I might pull it at a 10% loss if things don't work out right away. Looking for 20% upside.
I might be doing some conversions soon if I can find some (shouldn't be too hard to do if some more volatality comes in).

Tuesday's Options Recap: Risk Perceptions Fall Sharply

that was me on the KIE calls btw Fred......;-)