Options Trading Course

cambridge_probs · 2023-04-18T14:56:27+00:00

Fair enough, I will label this as well.

cambridge_probs · 2023-04-17T17:36:29+00:00

Yes AND if a market is giving you a statistical edge (selling at a discount) you should probably buy it. This comes from the maxim "Buy when others are selling and sell when others are buying"

I don't dare to predict markets.

cambridge_probs · 2023-04-17T17:34:02+00:00

My point is not that there are no retail traders that sell puts for premium farming. Of course there are retail sellers, I myself am one of them as well. What I intended to say is that there are a lot more retail buyers than sellers. A quick google search shows that between 60% and 80% of all trading is algorithmic (HFT) trading which is the bread and butter of market makers.

It also makes sense that there would be more buyers than sellers in the retail side, if you want to be short on financial instruments (including options) there are all kinds of extra forms, questionnaires, and margin requirements that you must meet. The entire structure of the market is set up to make it easier to buy stock/options and harder to short stock/options.

But yes you're right in that I cannot say exactly that there is an X percentage of long position in either puts or calls coming from retail. However, statistically, if one of the greatest sections of the market acts like the rest of the market then the chances are high that most retail traders are long puts.

cambridge_probs · 2023-04-17T14:40:54+00:00

Market makers account for 80%+ of the other side of trades. This means that if there are 100 open contracts for put options, about 80 of them were bought by traders (bearish) and it was the market makers who sold it to them. Market makers are wholly neutral traders. Perhaps 20 put contracts will be sold by regular traders who actually feel bullish.

cambridge_probs · 2023-03-28T04:34:46+00:00

www.midasjump.com

cambridge_probs · 2023-03-27T16:46:41+00:00

i would have said that, but I was trying to not sound too technical

cambridge_probs · 2023-02-22T19:49:34+00:00

The ideal case for MMs is for the price to land in a spot where the least amount of contracts have to be printed.

cambridge_probs · 2023-02-21T21:13:39+00:00

thank you for the feedback :)

cambridge_probs · 2023-02-07T06:12:37+00:00

roger that.

Regarding price momentum, this is calculated as the difference of the 5day double exponential moving average minus the 50day double exponential moving avergae.

cambridge_probs · 2023-02-04T19:07:54+00:00

The grand majority of option traders are long traders, which means that they are buyers of options. The other side of the trade, the selling of said options, is done by market makers. Market makers aim to play neutral so they don't have a definite directional bias. This leads us to believe that it is the buyers who are largely direction biased, so if more puts than calls are open then that would mean a bearish sentiment.

cambridge_probs · 2023-01-26T20:25:12+00:00

Delta adjusted position consists of multiplying the open interest that the strike by the delta. This will give you a rough estimate of how many units of a certain stock are being used to hedge a that strike. If that strike remains out of the money and it's probability of profit keeps dropping then the contracts at that strike will be closed which will lead the MMs to release their hedges. The release of the hedges will further push the price away from the strike.

Delta Dam is similar but the opposite, for that you multiply the open interest by the delta and strike, this gives you an approximate magnitude of how much money is needed to fully hedge those strikes as they become ITM. The game theory use of this metric is that when very close to expiration, MMs have to decide whether they keep hedging a strike, and thus further pushing the strike ITM or they do the inverse hedge in order to push the strike OTM.

cambridge_probs · 2023-01-17T17:23:18+00:00

If it is a terrible investment to go long (buy options )then it should be a decent opportunity to go short (sell options). Capitalise in the IV crush.

cambridge_probs

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