The VIX is a well-thought-out, robust calculation that charts volatility for you. It is a weighted average of all options with a bid greater than...
I agree that for most people in most situations, this is an academic argument. The differences will probably be too small to matter. But if you...
2.9% sounds way too high. .25% makes more sense. Why use a ten-year rate for options that expire in a month or two?
No problem. Please believe me when I say that behind the scary-looking math, all this options stuff is just common sense. Honest.
Yes I think you're right on that. Thanks for catching it. I see that the current price for the 13-week T-bill contract is 99.86. By your...
Sync, if you're talking about options on stock, the risk-free interest rate is used both to calculate the forward price of the stock, and also the...
The correct interest rate to use is YOUR interest rate. If you're a net buyer of options, what would you have made risk-free with the money you...
I think you missed my point Mizhael. Which was that there is no such thing as an objective risk/reward comparison of day trading vs swing trading...
Every successful trader I've ever known has a very, very idiosyncratic trading style they've arrived at through trial and error. They know that...
The wider the bid/ask spread, the better it is for market makers and the worse it is for retail traders. The tighter the bid/ask spread, the...
That may be so. But I've had many dealings with professors of finance who are brilliant mathematicians, and what stands out is how absolutely,...
Very interesting. It's not often here that I find tasty food for thought, so I appreciate it.
What would be an example of a "premium/strike price ratio?"
If you read in Barron's that a poll of the nation's investment advisors showed 95% are bullish on IBM, would that inspire you to buy IBM? Of...
Right, lognormal prices. That's what I meant. The skew in stock market index options doesn't change much, but the skew in other options - such...
Sorry for being so unclear. My question was meant neither as a real question nor a quiz question but rather as a rhetorical question. Its...
This seems like a nice theory but again, it doesn't hold up to even a cursory analysis. At this moment, SPY is about 83. The 82 puts have an...
Looking at the SPY options, I see that the 95 strike is trading at 31% IV, while the 60 strike is trading at 70% IV. So if IV is the market's...
Never heard of it.
All the options on IBM are related - some closely, some distantly. Let's start with the two most closely-related options - a put and a call at...
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