Any option writers out there?

subawrx · 4 February 2006

A very good broker I use for option writing, including advanced spread strategies is www.optionsxpress.com.au. Prices competitive and you can execute spreads through the website unlike any other broker I know.

dutchie · 8 July 2007

Does anyone know how the ASX calculates margins on sold options (formula??).

Are there any other sites OTHER than ASX that calculates/lists margins

Cheers

Dutchie

happytrader · 9 July 2007

Hi Dutchie

I'm not quite sure what you are asking for here. If you could explain further or present your objectives we might be able to help you.

Cheers
Happytrader

dutchie · 9 July 2007

G'day Happytrader

Thanks for the reply.

I found out how they work out margins on the ASX site.

The ASX also have a tool that works out margins for you but unfortunately there is some sort of glich so that I cannot use it properly (error message comes up and display is disjointed).

So I was wondering if there was an other site(s) which might have a similar tool.

Cheers

Dutchie

dutchie · 9 July 2007

Happytrader

Just worked out that its the browser thats the problem.

ASX margin estimator does not work when using FIREFOX browser

but works fine with INTERNET EXPLORER browser.

Told ASX and they will try and rectify problem with firefox in future.

Thanks anyway.

Cheers

Dutchie

jackson8 · 18 October 2008

hi guys
wondering if i can get some help i cant quite seem to get my head around time decay in options over different months
an example....

stock xyz last price $1.00

oct atm call premium $0.10 15 days to expiration
nov atm call premium $0.14 45 days to expiration extra .04
dec atm call premium $0,17 63 days to expiration extra .07

the oct option with only 15 days to go is worth more on a return value than the more out of date options ..........shouldnt it be the reverse with the options further out of date haveing more time premium by ratio

probably something very simple that i am overlooking but would like some feedback

thanks gary

cutz · 18 October 2008

Hi Jackson8

Assuming all other variables remain unchanged time decay accelerates as the option approaches expiry.

mazzatelli1000 · 18 October 2008

cutz said:
Hi Jackson8

Assuming all other variables remain unchanged time decay accelerates as the option approaches expiry.

Beware
This is most applicable to ATM options
ITM and OTM options do no possess as much time value, so time decay does accelerate towards expiry but then it flattens out just before expiry compared to an ATM option.

Hence especially when trading short OTM options it is advisable to to close out before expiry as there is little time decay to be gained for the large negative gamma one is exposed to.

Just my

sails · 18 October 2008

Hi Jackson8 - is your xyz stock going ex-dividend in November? That could explain why the November calls are cheaper...

cutz · 18 October 2008

mazzatelli1000 said:
Beware
This is most applicable to ATM options

Yep, point taken,

I just fired up Hoadleys to get a visual on Theta for a couple of short puts i've got on, peak of curve ATM tapers off both sides.
Thanks for the tip on Gamma.

Cutz.

sails · 18 October 2008

jackson8 said:
hi guys
wondering if i can get some help i cant quite seem to get my head around time decay in options over different months
an example....

stock xyz last price $1.00

oct atm call premium $0.10 15 days to expiration
nov atm call premium $0.14 45 days to expiration extra .04
dec atm call premium $0,17 63 days to expiration extra .07

the oct option with only 15 days to go is worth more on a return value than the more out of date options ..........shouldnt it be the reverse with the options further out of date haveing more time premium by ratio

Ignore my last reply - didn't read the question properly The effect of dividends on option pricing is often not understood, so I jumped to the wrong conclusion - hopefully this reply is more to the point...

If the option price is broken down into "theta" - then there is an average of .006 theta loss per day for October ($0.10 divided by 15 days), .003 theta loss per day for November and .002 per day for December.

This means a calandar spread where you sell the front month you would technically gain .006 (just over half a cent) of theta per day and only lose .002 per day for December.

In real life, it doesn't always work out so nicely as there are other option greeks at work - especially IV and gamma when it is close to expiry that can really upset the outcome. Mazz has given some good insight to close out short options that are almost worthless prior to expiry. Also supply and demand will affect how the MMs price the options near expiry day.

Option IVs are currently at extraordinarily high levels - and IV affects the further out months significantly. I wouldn't liketo be in calendar spreads when the air comes out of this IV balloon

mazzatelli1000 · 18 October 2008

sails said:
Ignore my last reply - didn't read the question properly The effect of dividends on option pricing is often not understood, so I jumped to the wrong conclusion - hopefully this reply is more to the point...

If the option price is broken down into "theta" - then there is an average of .006 theta loss per day for October ($0.10 divided by 15 days), .003 theta loss per day for November and .002 per day for December.

This means a calandar spread where you sell the front month you would technically gain .006 (just over half a cent) of theta per day and only lose .002 per day for December.

In real life, it doesn't always work out so nicely as there are other option greeks at work - especially IV and gamma when it is close to expiry that can really upset the outcome. Mazz has given some good insight to close out short options that are almost worthless prior to expiry. Also supply and demand will affect how the MMs price the options near expiry day.

Option IVs are currently at extraordinarily high levels - and IV affects the further out months significantly. I wouldn't liketo be in calendar spreads when the air comes out of this IV balloon

Hey Sails,

Now that Magdoran and WayneL are gone, you're the only guru left for us to turn to in option threads.

Hope you stick around!!!

sails · 18 October 2008

mazzatelli1000 said:
Hey Sails,

Now that Magdoran and WayneL are gone, you're the only guru left for us to turn to in option threads.

Hope you stick around!!!

Thanks Mazz, but not a guru by any means and still learning - just happy to share what I know and as time permits. No plans to leave

fimmwolf · 19 October 2008

why has WayneL gone?

I found his posts on options very informative. Particularly on the greeks.

cutz · 26 October 2008

Hi Sails ,

I’ve been working my way through the eBook by you recommended to me, Options Trading, The Hidden Reality, its been a bit of an eye opener and a lot more challenging to the material I have been reading so far. I was just wondering if it possible to get my hands on the full hardcover version through an Aussie retailer

Thanks,

Cutz.

mazzatelli1000 · 26 October 2008

cutz said:
Hi Sails ,

I’ve been working my way through the eBook by you recommended to me, Options Trading, The Hidden Reality, its been a bit of an eye opener and a lot more challenging to the material I have been reading so far. I was just wondering if it possible to get my hands on the full hardcover version through an Aussie retailer

Thanks,

Cutz.

Ahhhhh Charles Cottle - challenging yet interesting, the only options guru I know of that stresses synthetics.

Cutz, I believe that Charles Book is only available on his website or through second hand dealers such as eBay and Amazon.

sails · 26 October 2008

mazzatelli1000 said:
Ahhhhh Charles Cottle - challenging yet interesting, the only options guru I know of that stresses synthetics.

Cutz, I believe that Charles Book is only available on his website or through second hand dealers such as eBay and Amazon.

Yes, very challenging! I think I remember WayneL saying he was fortunate enough to have met up with Charles Cottle quite early in his options education.

While understanding synthetics, greeks, etc doesn't guarantee profits, it does help in understanding where the risks are lurking and to help identify trading opportunities.

Cutz, I have never seen Cottle's books available here in Aus...

mazzatelli1000 · 26 October 2008

sails said:
Yes, very challenging! I think I remember WayneL saying he was fortunate enough to have met up with Charles Cottle quite early in his options education.

While understanding synthetics, greeks, etc doesn't guarantee profits, it does help in understanding where the risks are lurking and to help identify trading opportunities.

Cutz, I have never seen Cottle's books available here in Aus...

Sails, Im not sure if your aware, but you can post on Charles forum and he usually answers whether guest or member, as long as the question is not too simple!!

I remember the first time reading it, especially about the butterflies and the embedded butterflies - confused the stuffing out of me

cutz · 26 October 2008

Cutz, I believe that Charles Book is only available on his website or through second hand dealers such as eBay and Amazon.

Thanks mazzatelli1000,

I shouda made the purchase when the aussie$ was nearly on par.

I’ve got some stuff coming from moneybags which will keep my seized up brain ticking over for a little while.

Cutz.

Beenjammin · 7 March 2009

Id really appreciate it if someone can talk me out writing near OTM naked calls in Australia, using a conditional buy order on the underlying equity near the strike price to cover?

I know the warning is "unlimited risk" but how often do these shares gap up significantly - ie <10 - 15%? Major gaps dont appear that likely, certainly I cant find any examples of extreme gaps of greater than 20% on optionable stocks (remember we're not talking small exploration or biotech startups that can explode up on a new discovery here - these are comparitively lower-beta, highly liquid stocks- CBA, NCM, RIO, AIO, BXB, HVN, FGL, TAH etc etc).....or am I just being blind?

What are the other dangers?

C'mon, scare the pants off me!

Any option writers out there?

Similar threads

Privacy & Transparency

Privacy & Transparency