I hear ya, thanks for the explain..

I try to keep it simple when looking at those things–volume & OI help, also, the pricing disparities between strike prices..and, as always, i-rates.. 4 starters..

There’s a couple reasons I say that:

1) The spreadsheet makes the assumption that the trading public only buys options and the “house” only sells them (obviously that’s not real life), so it ignores a potentially very large skewing factor.

2) In many cases, out of the money options were purchased months before at prices very different than the current price (example: someone who bought 45 calls when a stock was at 50 three months ago, now at 30). I think it’s darn near impossible to factor those kind of profit/loss scenarios when you’re trying to figure out which direction a stock should move when it gets close to expiration.

I had hoped to determine price movement close to expiration and I would have considered 65% accuracy or better a success. In fact, 65% accuracy on sizable moves in the last few days of option trading would probably put me on my own private island.

Unfortunately, I have found it to be about as accurate as a coin flip in determining both size and direction of moves (probably for the reasons above). That kind of accuracy puts you in a cardboard box on a steam grate.

So, it was back to the old drawing board….
‘

why do you believe that such a tool has little value?

re: “It has not proved to be useful..”

sidenote:
* financially (personally) beyond the loss of cash in stock only

BR – what page is this eras pet phrase in BN1.0?

I uploaded the spreadsheet here:

http://acrossthestreetnet.wordpress.com/files/2009/05/options-analysis-gm-rename-to-xls.doc

note: it must be downloaded and the extension changed to XLS.

Thanks for the optionpain link (didn’t realize I was trying to re-invent the wheel).

“Breaking News” – this is the part where I say, “I told you so”

maybe the stock .. but the hard assets have value* .. hell the dirt under the factories have value**
how do you get your hands in the tillbox?

sidenotes:
* provided the bankruptcy*** rules in America relieve holders of dues
** maybe not with Americas factory history of dumping
*** maybe thats the root problem

Exactly. The ole circle jerk from Wells Fargo, circa March 2009. Thanks for the laugh.

They have a similar result at http://www.optionpain.com/MaxPain/Max-Pain.php
It’s the $3.00 strike for option max pain.