$2000 Profit Off First Option Trade

Discussion in 'Options' started by Fundlord, Jan 6, 2016.

  1. drcha

    drcha

    You are right to paper trade them and watch how they move around, both near to and remote from expiration. You can look at all the graphs you want but to fully educate yourself, there is nothing like writing it on the spreadsheet and watching what it does.
     
    #31     Jan 8, 2016
    Fundlord likes this.
  2. prc117f

    prc117f

    Thats a good book, I remember years ago reading it front to back. Really good book, there is a new edition out.
     
    #32     Jan 10, 2016
  3. prc117f

    prc117f

    The thing is options pricing goes non linear as panic sets in and pricing models get stressed. BS or Binomial might price at X but if there is a whale who has a profit and he wants to get out and your at the top of the book, he will pay just to get out even if he paid more than what the model is pricing because he just wants to lock in his profit quickly and not wait till things get out of hand.
    Of course once the trade crosses the spread, you will see a new IV and things reach equilibrium. (For the moment)
     
    #33     Jan 10, 2016
    Georgi90 likes this.