Paid up big for my short 4000 calls a horrible 87- ouch! This now means that I am in a loss for my trading year-not by a huge amount, but March has been very unkind. My year starts 31Jan, so I have a few months yet to redeem myself and if the F throws itself off a cliff I could do well on that side too.
I can't remember a more deeply frustrating time and many traders are getting mashed by these crazy moves. there are times to stand aside and times to trade, and perhaps I should have used my brains to think about what was odd about the market- the volatility and in particular the excessive pricing of calls. I've seen puts and calls trade at the same vol, and didn't know how to trade that either- both were 9%, and using my system of comparing level premium it made no sense, until the market cracked.
Now options too cheap means a disregard for risk, options too expensive means a volatile market, but when pricing of puts against calls makes no sense again, it tells me there is risk to the upside- which in a way is more risky than downside as upside can go as far as a trillion dollars will take it.
Monday, 6 April 2009
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