We have had several opportunities this past few months to make significant plays using what I call a hidden option arbitrage strategy. Here is a simple strategy I employ when trading options. I often scan the Volatility Indexes to find rock bottom prices. When the index gives you low readings on a historical chart scale you can purchase options at a discount. You can also employ a contrarian trade if you see candles with long tweezers that are inverse to the performance of the underlying. Remember though, options are extremely risky. You can also use a strangle option trade to make sure your not on the wrong side. For every long candle shadow the next day or days have been extremely volatile. A strangle helps you profit from uncertain directions, but an expectation of market volatility. Strangle option strategy is using out-of-the money option strikes that are above and below the underlying price.
Comments
QuantitativeExhaustion
⋅
Google volatility compared to Google stock price
QuantitativeExhaustion
⋅
Support broke at the 910 level, as which was discussed by fibonacci queen a few days ago. Nice clue for those that bought puts 45 mins before the close yesterday.
QuantitativeExhaustion
⋅
Looking at DJIA bid volatility
QuantitativeExhaustion
⋅
Big tweezers long shadow candles. Wouldn't put in a strangle here. Probably better to actually sell options and collect on the premiums. I'd expect some sort of consolidation before next volatile move. If this were to be the case, straddle into the fall.
HenningGurth
⋅
Very interesting info. Thx for share your knowledge JR.
I think options market is very useful to make operation's coverage and structurated products, truly very interesting. You can make your own no risk investment product with assets over the world. Very intersting alternative to people who wants to invest in assets with high volatility but that they have fear to risk. Thx another time.
But i dont like that the option's price is very murky. The emisors put the price that they wish. It's dark, very dark. They say the they have a clear formule but is reallly a very complicated formule with volatility, volume, price, prime....
I like clear datagrams, clear data series with min and max quoted in a organized market tick by tick. I know they are also manipulated but it's less and you can profit it.
Anyway your published info is very interesting, Thx JR.
QuantitativeExhaustion
⋅
Soybeans is developing many long shadow candle tweezers. There is very good chance that soybean prices will drop significantly before the end of the year. Previously support at 18 has held for the soy volatility index. Now we are seeing shadows testing the area.
QuantitativeExhaustion
⋅
Here were two examples using the Euro Volatility Index and Euro Futures chart.