WYmIaaXJEg 's Profile

Member since Mar 17, 2009, follows 0 people, 0 public groups, 317 public bookmarks (319 total).

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  • It’s Always the End of the World as We Know It - NYTimes.com on 2010-01-01
    • Religions from Zoroastrianism to Judaism to Christianity to U.F.O. cults have
      been built around notions of sin and the world’s end. The Y2K threat resonated
      with those ideas.

    • Apocalyptic scenarios are a diversion from real problems — poverty,
      terrorism, broken financial systems — needing intelligent attention. Even
      something as down-to-earth as the swine-flu scare has seemed at moments to be
      less about testing our health care system and its emergency readiness than about
      the fate of a diseased civilization drowning in its own fluids. We wallow in the
      idea that one day everything might change in, as St. Paul put it, the “twinkling
      of an eye” — that a calamity might prove to be the longed-for transformation.
      But turning practical problems into cosmic cataclysms takes us further away from
      actual solutions.

    • 1 more annotations...
  • The God That Fails - NYTimes.com on 2010-01-01
    • Now we seem to expect perfection from government and then throw temper tantrums
      when it is not achieved. We seem to be in the position of young adolescents —
      who believe mommy and daddy can take care of everything, and then grow angry and
      cynical when it becomes clear they can’t
    • Reality is unpredictable, and no amount of computer technology is going to
      change that. Bureaucracies are always blind because they convert the rich flow
      of personalities and events into crude notations that can be filed and collated.
      Human institutions are always going to miss crucial clues because the
      information in the universe is infinite and events do not conform to algorithmic
      regularity.
    • 3 more annotations...
  • How time decay impacts ITM options: TradeKing Trader Network on 2009-12-30
      • ATM options usually have more time premium in their prices than ITM
        and OTM options         with the same expiration date.
      • ATM options have the largest price-acceleration factor - attractive
        to many speculators - but that acceleration comes with a catch.         Higher
        potential acceleration means you’ll also face a high rate of time decay
    • If you're buying ITM options what you're primarily paying for is
      intrinsic value.       This is the value you would receive if you exercised
      your option
    • 2 more annotations...
  • Options and accelerating time decay : TradeKing Trader Network on 2009-12-30
    • Options are all about trade-offs. If you want slower time decay, you
      have to be willing to accept slower acceleration in your option contract’s
      price.
    • So this is the dilemma of buying ATM options. Most traders buy ATM options
      because they’re attracted to the acceleration factor, but then they also have to
      content with faster time decay.

    • 1 more annotations...
  • For long calls, time value is money: Pt 2: TradeKing Trader Network on 2009-12-30
    • Last week we introduced time value and intrinsic value and discussed how time value is usually distributed across the strike prices.
      This is a crucial concept to grasp to help you figure out when and which option
      to buy. Should we be buying in-, at-, or out-of-the-money options and what
      expiration? Time value is a critical piece in that puzzle.
  • Buying calls: time is money : TradeKing Trader Network on 2009-12-30
    • For ATM (if stock is exactly equal to the strike price) and OTM options, there
      is no intrinsic value, so the quoted option price is all time value
    • The reason is because as the option contract becomes deeper and deeper
      in-the-money it starts to look and act more and more like a stock
      position.
    • 1 more annotations...
  • Which came first: implied volatility or the egg?: TradeKing Trader Network on 2009-12-30
    • In a nutshell, several components feed into the calculation of an option’s
      price, including the stock price, the option’s strike and expiration date,
      current interest rates, possibly dividends and, of course, IV:
  • Back-to-basics 11: More Implied Volatility: TradeKing Trader Network on 2009-12-30
    • As IV increases, options prices tend to increase (assuming all other variables
      hold steady), since volatility often attracts more market interest in a given
      contract. In other words, rising IV is good for the options owner and
      bad for the option seller.
    • The chart below shows the normal distribution of stock prices for a $50 stock
      over a year. Statistics 101 tells us that 68% of the time the stock will move in
      the fattest part of this range by 1 standard deviation in either direction, +$10
      or =$10 or between $40 and $60.


  • Back-to-basics 10: What’s Implied Volatility?: TradeKing Trader Network on 2009-12-30
    • Historical volatility is defined in textbooks as “the
      annualized standard deviation of past stock price movements”. In plain English,
      that just means how much the stock price fluctuated on a day-to-day basis over a
      one-year period.
    • implied volatility. This figure tells you what the
      marketplace, via current prices, is “implying” a stock’s future volatility will
      be
    • 3 more annotations...
  • Back-to-basics 9: even more delta: TradeKing Trader Network on 2009-12-30
    • We said earlier an at-the-money option usually has delta of 0.50 (also called
      simply “a 50 delta”). That means there’s a 50/50 chance this option winds up in-
      or out-of-the-money at expiration.

    • Because probabilities are changing as expiration nears, delta tends to
      react differently – usually more dramatically - to changes in the stock
      price.

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