9 replies to this topic

[Russ]

To catch the next move down to likely 1300 or more which options would be the best?

[eminimee]

best for what? I've started collecting the April 1410 spx puts fwiw

[Russ]

best for what? I've started collecting the April 1410 spx puts fwiw

Here is what a Christian Minister friend (who has a lot of experience with options) of mine says:

"If you are buying it, it does not matter which one. OEX is better for two reasons, 1) it is more volatile than SPX this time, 2) it can be exercised by you prior to expiration. You know you can sell them or just one day prior to expiration you can exercise them, demanding the face calue.

But if you will sell options than your question is the valid one. In this case you sell European OEX, that is XEO. This is new one, and can not be exercised prior to expiration. So, since you are buying, go for OEX."

I am more attracted to a further out strike price, oex 600 as the closer ones are pretty high priced, there is also a problem with options as they get deeper into the money the price stops going down as much on a percent by point basis.

Russ

[vulture]

best for what? I've started collecting the April 1410 spx puts fwiw

Here is what a Christian Minister friend (who has a lot of experience with options) of mine says:

"If you are buying it, it does not matter which one. OEX is better for two reasons, 1) it is more volatile than SPX this time, 2) it can be exercised by you prior to expiration. You know you can sell them or just one day prior to expiration you can exercise them, demanding the face calue.

But if you will sell options than your question is the valid one. In this case you sell European OEX, that is XEO. This is new one, and can not be exercised prior to expiration. So, since you are buying, go for OEX."

I am more attracted to a further out strike price, oex 600 as the closer ones are pretty high priced, there is also a problem with options as they get deeper into the money the price stops going down as much on a percent by point basis.

Russ

Actually, there is another consideration. If you are inclined to be a premium seller, you might want to look at the CME listed products (i.e. ES, NQ, ER2) or the CBOT product (YM). The reason I mention this is because they calculate margin requirements according to SPAN, which is an order of magnitude more reasonable than the amount of money you have to tie up using the margin formula adapted after the crash of 1987 and which applies to SPX, OEX, NDX, DJX, etc, etc.

OTOH, if you were to play vertical spreads or buy outright positions, then I would say you are better off with OEX, SPX, etc since the "naked" margining is not a concern and because you will find better spreads and better liquidity in these products.

[Russ]

[/quote] Actually, there is another consideration. If you are inclined to be a premium seller, you might want to look at the CME listed products (i.e. ES, NQ, ER2) or the CBOT product (YM). The reason I mention this is because they calculate margin requirements according to SPAN, which is an order of magnitude more reasonable than the amount of money you have to tie up using the margin formula adapted after the crash of 1987 and which applies to SPX, OEX, NDX, DJX, etc, etc. OTOH, if you were to play vertical spreads or buy outright positions, then I would say you are better off with OEX, SPX, etc since the "naked" margining is not a concern and because you will find better spreads and better liquidity in these products. [/quote] Thanks Vulture, I have decided to buy OEX 600 June puts. R

[flyers&divers]

The best options are the ones with the most liquidity. It costs getting in and out (in case you change your mind). Alot of the pros are moving more and more into the IWM options because it is liquid, has a lot of strikes and it moves nicely. Compare bid ask $ spreads and you will see. Regards, F&D

[Russ]

Are those available for the sp500 or sp100 or dow?
Thanks
Russ

The best options are the ones with the most liquidity.

It costs getting in and out (in case you change your mind).

Alot of the pros are moving more and more into the IWM options because it is liquid, has a lot of strikes and it moves nicely.

Compare bid ask $ spreads and you will see.


Regards,

F&D

[flyers&divers]

I forgot to mention that the premium is cheaper on the ETF products then on the CBOE products. For example S&P futures options are a noncompetitive brokerage market and OEX are only taded in one venue while the IWM, SPY and QQQQ options have multiple venues. For this reason the bid/ask is less and it so happens that the premium is cheaper too on the SPY and IWM otions. F&D

[Russ]

Yes I went and viewed the IWM, you are right the speads are very tight compared to oex. Looks like a winner.

Russ

I forgot to mention that the premium is cheaper on the ETF products then on the CBOE products.

For example S&P futures options are a noncompetitive brokerage market and OEX are only taded in one venue while the IWM, SPY and QQQQ options have multiple venues. For this reason the bid/ask is less and it so happens that the premium is cheaper too on the SPY and IWM otions.

F&D

[vulture]

Yes I went and viewed the IWM, you are right the speads are very tight compared to oex. Looks like a winner.

Russ

I forgot to mention that the premium is cheaper on the ETF products then on the CBOE products.

For example S&P futures options are a noncompetitive brokerage market and OEX are only taded in one venue while the IWM, SPY and QQQQ options have multiple venues. For this reason the bid/ask is less and it so happens that the premium is cheaper too on the SPY and IWM otions.

F&D

Flyers and Divers is right, forgot to mention the options on the ETF's. Very liquid and penny spread implementation in the process. Also not a bad alternative to carrying longs or shorts on the market by simply buying deep itm puts or calls. Eliminate the premium decay while maintaining exposure 1:1 on all market moves. Lower cost of carry.