Options and their price action analysis.
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A small write up on how the OPTION PRICES BEHAVES AT SUPPORT & RESISTANCE pic.twitter.com/eBlXAZU4Ma
— Bijay (@Bijay_reborn) July 17, 2021
More from Subhadip Nandy
IV - A thread
In financial mathematics, implied volatility of an option contract is
that value of the volatility of the underlying instrument which, when
input in an option pricing model ) will return a theoretical value equal to the current market price of the option (1/n)
Implied volatility, a forward-looking and subjective measure, differs
from historical volatility because the latter is calculated from known
past returns of a security. .
https://t.co/iC5wVf7kvj (2/n)
To understand where Implied Volatility stands in terms of the underlying, implied volatility rank is used to understand its implied volatility from a one year high and low IV.
https://t.co/NFPOidRRcH
https://t.co/qNqinEqaKY
(3/n)
Options traders are always looking at the IV and IVR/IVP. For option
buyers, a low IV environment is best to initiate positions as the
subsequent rise in IV actually helps their positions . Even if the IV
remains flat, the position is not hurt by volatility (4/n)
Option sellers on the other hand are looking for high IV scenarios, where
the subsequent fall in IV ( known a vol crush , most often seen after
earnings/events) helps their positions. Here also, if the IV does not
rise, it does not hurt a seller's positions (5/n)
In financial mathematics, implied volatility of an option contract is
that value of the volatility of the underlying instrument which, when
input in an option pricing model ) will return a theoretical value equal to the current market price of the option (1/n)
Implied volatility, a forward-looking and subjective measure, differs
from historical volatility because the latter is calculated from known
past returns of a security. .
https://t.co/iC5wVf7kvj (2/n)
To understand where Implied Volatility stands in terms of the underlying, implied volatility rank is used to understand its implied volatility from a one year high and low IV.
https://t.co/NFPOidRRcH
https://t.co/qNqinEqaKY
(3/n)
Options traders are always looking at the IV and IVR/IVP. For option
buyers, a low IV environment is best to initiate positions as the
subsequent rise in IV actually helps their positions . Even if the IV
remains flat, the position is not hurt by volatility (4/n)
Option sellers on the other hand are looking for high IV scenarios, where
the subsequent fall in IV ( known a vol crush , most often seen after
earnings/events) helps their positions. Here also, if the IV does not
rise, it does not hurt a seller's positions (5/n)
Time I retweeted this ЁЯШГ
IV - A thread
— Subhadip Nandy (@SubhadipNandy16) September 20, 2018
In financial mathematics, implied volatility of an option contract is
that value of the volatility of the underlying instrument which, when
input in an option pricing model ) will return a theoretical value equal to the current market price of the option (1/n)
This is actually an interesting question and a correct observation. Many people before you also have made this observation, so I am going to explain this the best I can
I am trading since badla days. There being long meant you had to pay badla / interest and being short meant you received badla. Similar to an options buyer having theta burn and an options seller being theta positive. So the bias among pros were being short bit
Now, as of now I am an options buyer. All my strategies are geared towards options buying, so I have a theta burn continuosly. I do use strategies to cover that a bit, but still the burn is there
Now, let's consider how an options buyer makes money. His enemy is theta, vega can be friend or enemy ( coming to this in next tweet) , Delta is whether his view is right or wrong
Now say I am bullish on BNF and I buy calls and I am directionally correct . As BNF goes up, generally IV will decrease. This leads to a double whammy.
1. Vega hurts me
2. Theta decay increases.
So, the position does give money, but slowly
Ek baat to hai dada, u like mandi over teji.. Don't u... I mean u play both sides bt still... Im ryt \U0001f911\U0001f911
— VaibhavSharma (@vaibhav2631) September 23, 2022
I am trading since badla days. There being long meant you had to pay badla / interest and being short meant you received badla. Similar to an options buyer having theta burn and an options seller being theta positive. So the bias among pros were being short bit
Now, as of now I am an options buyer. All my strategies are geared towards options buying, so I have a theta burn continuosly. I do use strategies to cover that a bit, but still the burn is there
Now, let's consider how an options buyer makes money. His enemy is theta, vega can be friend or enemy ( coming to this in next tweet) , Delta is whether his view is right or wrong
Now say I am bullish on BNF and I buy calls and I am directionally correct . As BNF goes up, generally IV will decrease. This leads to a double whammy.
1. Vega hurts me
2. Theta decay increases.
So, the position does give money, but slowly
More from Optionslearnings
Low VIX doesn't necessarily mean ideal time for option buyers. If premiums aren't falling consistently during the day in low VIX, it usually gives those small delta & IV spikes, just enough to irritate both option buyers & sellers. Same happens when VIX is ultra high.
@SarangSood Sarang bhai according to you what number of vix is ideal for option buyers and what is that for option sellers? And is there any common number which is ideal for both?
— Dhaval bhatt (@Dhavalb55011726) July 14, 2021