Day Trading Stocks & Futures

[against_tides]

that's not the point i'm trying to make. i wanted to understand that when there is such a complex and intricate process and method evolved to study the behaviour of options with reg to pricing etc., to what use is this knowledge or study unless it can be used in your trading decision, otherwise why does one need this complex knowledge. it was not developed without purpose

are you carrying ydas ce???

 

[Raj232]

I know my what my problem is and im gonna stop talking soon and focus on my work.

But to finish what I started, let me state my understanding .... Volatility measures a stock's fluctuation. Implied volatility is a measure of this fluctuation expressed as a percentage. Historical volatility is nothing but a measure of volatility of the past x number of days and is obtained by calculating standard deviations. Therefore, yesterday's volatility will be past data for today while calculating historical volatility. Yesterday's absolute IV number in itself cannot become an absolute HV number because its changing all day( if thats what you think i was implying). Being an options trader, I trusted that you will understand this. But it looks like we are all caught up in the nuances of words. Moreover, you kept insisting that we should compare today's IV with yesterdays.

Edit: Please note that I am never usually condescending with anyone on the forum. However, sometimes if my general tone appears aggressive, please consider that as mostly excitement rather than aggression.

Good guys, healthy discussion is always encouraged. Different perspectives of the same this gives a better insight !!

 

[Raj232]

Anyone knows why Pharma is down do badly today ? ( -2% approx)
Auropharma was trading at Rs 830 level on 29th April .. today it is around Rs 620 level.. almost 25% eroded in around 1.5 months time !!!

 

[mohan.sic]

Though this method can tell you whether the option is cheaper or costly but there would not be any practical use of it. The reason is that different expiries have different events. The bigger the event, the higher the IV.

IMO if we compare the IVs of same delta CE & PE of the same expiry, we can find if there is any discrepancy. This will allow us to know if CE is cheaper in IV than PE or vice versa. Options are very dynamic instruments. So in this method your expiry is the same as well as the delta making them easy to compare. Bdw cosltly option doesn't mean that we can sell it.

Agree with you completely. That is why I am repeatedly saying that, tracking IV will not help much in practical trading for most of us. But yes, tracking IV's is important to avoid wrong entries like buying unreasonable high premiums at times of events.

 

[vikas2131]

no one talking about vix nowadays...

in next 1 months or so, i see it spiking quite a bit .

 

[Raj232]

i have been reading all the posts with interest . forgive me if i sound stupid or ignorant., and i am not trying to be sarcastic either. what i gather from all this is the study of all this is a fine way to understand the behaviour of the option at a given point in time.

what i have not been able to understand over the years is how do you take a decision based on these whether you should buy a call or put etc etc.., i mean how does one take a trading decision based on all this.

Mostly this would be more useful to option writers to limit risk. Option buyers usually buy PE and CE like lottery tickets.. Rs 10 more or less does not matter .. )

 

[Smart_trade]

Anyone knows why Pharma is down do badly today ? ( -2% approx)
Auropharma was trading at Rs 830 level on 29th April .. today it is around Rs 620 level.. almost 25% eroded in around 1.5 months time !!!

Pharma companies are still not able to get their act togather on US FDA inspection front.....they have these periodic inspections and FDA comes out with series of observation. They need to reduce their dependence on US as European and Japanese inspections are more friendly than US...Uncle SAM is not known to be friendly towards Indian companies when it comes to quality as well as pricing.

Smart_trade

 

[Riskyman]

@against_tides Maybe you'll get a chance to short crude. Keep watching!

 

[against_tides]

long in nifty

 

[kharikumaar]

are you carrying ydas ce???

i had carried. i covered it in the morning. when the market started going down..
even though the market is going down so much i still do not sense much of pressure on the downside ( i dont know. must be just my feeling ). probably a reversal later or next week etc. in the meantime. i could not trade as i was busy with a few other things and couldnt give continuous attention