Comments for Dean Mouscher's masteroptions.com http://masteroptions.com Free Options Education Sun, 29 Aug 2010 14:49:38 -0500 http://wordpress.org/?v=2.8.2 hourly 1 Comment on What is an Option Worth? by PeterW http://masteroptions.com/?p=3&cpage=1#comment-26206 PeterW Sun, 29 Aug 2010 14:49:38 +0000 http://masteroptions.com/?p=3#comment-26206 Hello Dean, I am new in options trading and find your explanations clear and easy to follow. Regarding the comment on the ARNA puts I would have sold them as well, that's obvious to me. Regarding Hoadly I have his Excel add in unfortunately I find it hard to use and his software complex with NO support, he is TERRIBLE with support, in fact he told me he knows nothing about options trading he is just a programmer, WOW that really stunned me! So I am not exactly a fan of his. Hello Dean,
I am new in options trading and find your explanations clear and easy to follow. Regarding the comment on the ARNA puts I would have sold them as well, that’s obvious to me. Regarding Hoadly I have his Excel add in unfortunately I find it hard to use and his software complex with NO support, he is TERRIBLE with support, in fact he told me he knows nothing about options trading he is just a programmer, WOW that really stunned me!
So I am not exactly a fan of his.

]]> Comment on What is an Option Worth? by Leo http://masteroptions.com/?p=3&cpage=1#comment-26059 Leo Thu, 19 Aug 2010 12:50:14 +0000 http://masteroptions.com/?p=3#comment-26059 Great video!! Now that we have a better understanding on what makes options prices change (Implied Volatility), where can a new traders go to find information regarding if the options are cheap or expensive? Thank you Great video!! Now that we have a better understanding on what makes options prices change (Implied Volatility), where can a new traders go to find information regarding if the options are cheap or expensive?

Thank you

]]> Comment on What is an Option Worth? by Max http://masteroptions.com/?p=3&cpage=1#comment-26030 Max Mon, 16 Aug 2010 22:37:51 +0000 http://masteroptions.com/?p=3#comment-26030 were the videos taking down, I can't seem to location any of the videos? Odd. were the videos taking down, I can’t seem to location any of the videos? Odd.

]]> Comment on What is an Option Worth? by Dean http://masteroptions.com/?p=3&cpage=1#comment-25900 Dean Mon, 02 Aug 2010 12:39:19 +0000 http://masteroptions.com/?p=3#comment-25900 Hi Mauro: The biggest reason they may differ among brokers is that different brokers assume a different risk-free interest rate. They may also input different dividend assumptions for the future. The use of different pricing models may also have a small effect. Hi Mauro:

The biggest reason they may differ among brokers is that different brokers assume a different risk-free interest rate. They may also input different dividend assumptions for the future. The use of different pricing models may also have a small effect.

]]> Comment on What is an Option Worth? by Mauro http://masteroptions.com/?p=3&cpage=1#comment-25897 Mauro Mon, 02 Aug 2010 00:08:47 +0000 http://masteroptions.com/?p=3#comment-25897 Hi Dean, thanks a lot for this video. My question is: What is the reason does greeks and IV values do not agree between differents borkers? (However, the values of bid / ask spread is the same) Hi Dean, thanks a lot for this video. My question is: What is the reason does greeks and IV values do not agree between differents borkers? (However, the values of bid / ask spread is the same)

]]> Comment on What is an Option Worth? by Dean http://masteroptions.com/?p=3&cpage=1#comment-25666 Dean Tue, 22 Jun 2010 15:45:47 +0000 http://masteroptions.com/?p=3#comment-25666 Very interesting question Laxmi. From the strict point of view of option pricing theory according to Black-Scholes, you would try to predict future volatility of the futures - by looking at past activity and anything you know about probable increase or decrease of volatility in the future - and compare your projected future actual volatility of the futures to the current implied volatility of the options. That's the theory. From a practical point of view there are additional considerations. Looking at the historical range of IV, is it currently near the low end of the range or the high end? How big is the spread between the bid and the offer? And perhaps most important, how prone are freight futures to big sudden moves? This last question is important because it addresses the biggest weakness of option pricing theory - the fact that real-life price distribution in most markets does not correspond to a lognormal distribution. This phenomenon is often referred to as "fat tails." Nassim Taleb wrote a whole book about it called "The Black Swan." Where are these options traded? If you could point me to price information about these futures and options I'd be happy to take a look at them and give you my opinion. Very interesting question Laxmi. From the strict point of view of option pricing theory according to Black-Scholes, you would try to predict future volatility of the futures – by looking at past activity and anything you know about probable increase or decrease of volatility in the future – and compare your projected future actual volatility of the futures to the current implied volatility of the options.

That’s the theory. From a practical point of view there are additional considerations. Looking at the historical range of IV, is it currently near the low end of the range or the high end? How big is the spread between the bid and the offer? And perhaps most important, how prone are freight futures to big sudden moves?

This last question is important because it addresses the biggest weakness of option pricing theory – the fact that real-life price distribution in most markets does not correspond to a lognormal distribution. This phenomenon is often referred to as “fat tails.” Nassim Taleb wrote a whole book about it called “The Black Swan.”

Where are these options traded? If you could point me to price information about these futures and options I’d be happy to take a look at them and give you my opinion.

]]> Comment on What is an Option Worth? by LAXMI http://masteroptions.com/?p=3&cpage=1#comment-25665 LAXMI Tue, 22 Jun 2010 15:17:14 +0000 http://masteroptions.com/?p=3#comment-25665 Hi Dean, thanks a lot for this video. It excellent! It cleared a lot of my queries on implied volatility. I am trying to trade in options in freight futures and was wondering how to judge from the implied volatility published by the brokers whether the option is over priced or under priced. Maybe i should look at the historical implied volatilty v/s the price of the underlying? Can you pls suggset whether am on the right tract. Thanks laxmi Hi Dean, thanks a lot for this video. It excellent! It cleared a lot of my queries on implied volatility. I am trying to trade in options in freight futures and was wondering how to judge from the implied volatility published by the brokers whether the option is over priced or under priced. Maybe i should look at the historical implied volatilty v/s the price of the underlying? Can you pls suggset whether am on the right tract.
Thanks laxmi

]]> Comment on What is an Option Worth? by Mark http://masteroptions.com/?p=3&cpage=1#comment-25646 Mark Sun, 20 Jun 2010 15:28:01 +0000 http://masteroptions.com/?p=3#comment-25646 WOW - great example at the end with Arena Pharma. Great video. Two thumbs up. WOW – great example at the end with Arena Pharma. Great video. Two thumbs up.

]]> Comment on The SPX/VIX inverse relationship by jalexander http://masteroptions.com/?p=95&cpage=1#comment-25644 jalexander Sun, 20 Jun 2010 10:37:48 +0000 http://masteroptions.com/?p=95#comment-25644 The VIX/SPX relationship and the VIX, itself, over twenty years, are pictured in two intriguing graphs. http://www.scribd.com/doc/29058287/VIX-SPX-Analysis-Graphs-over-time The VIX/SPX relationship and the VIX, itself, over twenty years, are pictured in two intriguing graphs.

http://www.scribd.com/doc/29058287/VIX-SPX-Analysis-Graphs-over-time

]]> Comment on Do 90% of Options Expire Worthless? by Paul http://masteroptions.com/?p=63&cpage=1#comment-25374 Paul Fri, 30 Apr 2010 20:37:50 +0000 http://masteroptions.com/?p=63#comment-25374 Options expiring "worthless" is a mis-understood concept. IF I buy a call option for $500 hoping to see an increase in Stock ABC and the stock soars, why would I exercise the option when I could just as easily sell the face value of the option itself to someone else ? (which would now be worth $500 + most of the market gains). If that person, in turn, makes money he could do the same thing. There is often little incentive to actually exericise the option leaving the original sellers to clean up. However, occassionally, someone will make a wopping profit and want to exercise the option in which case the seller is in trouble. Options expiring “worthless” is a mis-understood concept. IF I buy a call option for $500 hoping to see an increase in Stock ABC and the stock soars, why would I exercise the option when I could just as easily sell the face value of the option itself to someone else ? (which would now be worth $500 + most of the market gains). If that person, in turn, makes money he could do the same thing. There is often little incentive to actually exericise the option leaving the original sellers to clean up. However, occassionally, someone will make a wopping profit and want to exercise the option in which case the seller is in trouble.

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