All Entries Tagged With: "options"
Customized Volatility: A VIX For Everyone
If you think the world is VIX-y now, just wait, it’s about to get VIX-ier. This, from the CBOE. The Chicago Board Options Exchange (CBOE) today announced that it has filed for Securities and Exchange Commission (SEC) approval to list options based on recently-created volatility indexes that track individual stocks —Apple (AAPL), Amazon (AMZN), Goldman Sachs (GS), [...]
When Options Near Expiration: A View of 3 Apple Options
Option theory may work great – in theory, but sometimes it pays to take a look at how options actually behave in the open market. Case in point, what really happens as an option nears its expiration date? Our new ZeccoPulse contributor Adam Warner wrote a couple of articles (here and here) on how a [...]
Strike Price Pinning Part 2: The Pin Empire Strikes Back
As I mentioned in my last post, we reside in a New Pin World Order thanks to more frequent expiration and tighter strike prices. Thanks to CBOE Weeklys options, we now have expiration day every Friday. Instead of 12 expirations per year in every name that lists options, we now have 52 in the most [...]
The VIX: Calculating Expected Daily Price Changes
Adam Warner’s first post on ZeccoPulse frames the VIX in an interesting way, pointing out that the VIX doesn’t “trade” like a stock because it’s really only a statistic. Speaking of statistics, you’ll often hear people who comment on the VIX discuss how the VIX “implies” that the market could move a certain percentage on [...]
Options Expiration: Strike Price “Pinning” Explained
A long time ago, in a galaxy far, far away from here, options watchers used to obsess over “expiration pins.” That’s what we call it when a stock closes on expiration day right at, or very near, a specific option strike price. Traders used to swear that strike prices would pull stocks towards them like [...]
Skew That: A New CBOE Index
What would a month be in the options biz if we didn’t get some new volatility index or ETF to play with? Last month it was SKEW: Investors looking for Black Swans in the stock market may be able to find them in the latest offering from the Chicago Board Options Exchange. On Feb. 23, [...]
Charting the VIX: Does Technical Analysis Work?
You can view a chart of the VIX just as you can for any stock. Just enter the symbol, add some moving averages, maybe even some Bollinger Bands and RSI indicators and you’re on your way. In fact, here’s a chart of the VIX going back about six months (as of February 23) with a [...]
IBM: A Case Study On Replacing Stock With Call Options
In a previous post on IBM (IBM), I explained the company’s plan for boosting its earnings into 2015 and noted that a friend of mine who has worked there for many years has built up a large position in the stock. His dilemma? He wants to stay bullish on his employer, but he may have [...]
Alcoa: An Example of Options Volatility And Pricing
In a recent post I suggested that in the days just before a company is about to issue an earnings release, the implied volatility for shorter-term options can soar much higher than those that expire later. This appears to be what happened to options for Alcoa (AA). In the days just prior to Monday’s earnings [...]
Netflix: How Volatile Should It Be? Nobody Seems To Know
Netflix (NFLX) appears to be one of those stocks that doesn’t know how volatile it’s supposed to be – or at least options traders seem a bit confused. There’s a large short interest in this stock (T2 Partners founder Whitney Tilson evidently among them), while others seem to disagree, like Geoff Gannon and Erick Schonfeld [...]
