Comments on: Operation 1100 http://www.ritholtz.com/blog/2009/10/operation-1100/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 15:03:50 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: How the Common Man Sees It http://www.ritholtz.com/blog/2009/10/operation-1100/comment-page-1/#comment-226536 How the Common Man Sees It Fri, 16 Oct 2009 14:55:24 +0000 http://www.ritholtz.com/blog/?p=41356#comment-226536 Some of my best trades happen during this week when we see individual stocks get shaken up and down to root out panicky last week option holders. If you do it right you can get some good rolls into the next month as the money men try to square accounts. Usually anything in the 50 cent range on either side of a strike price can be profitable if you are trading towards the strike price and think that is where it will close. Another useful tool is the max pain indicator but it is not fail proof. It serves as a useful guideline. Just keep in mind that as expiration approaches the closing out of positions can skew the max pain point http://www.optionpain.com/MaxPain/Max-Pain.php Some of my best trades happen during this week when we see individual stocks get shaken up and down to root out panicky last week option holders. If you do it right you can get some good rolls into the next month as the money men try to square accounts. Usually anything in the 50 cent range on either side of a strike price can be profitable if you are trading towards the strike price and think that is where it will close.

Another useful tool is the max pain indicator but it is not fail proof. It serves as a useful guideline. Just keep in mind that as expiration approaches the closing out of positions can skew the max pain point

http://www.optionpain.com/MaxPain/Max-Pain.php

]]> By: KidDynamite http://www.ritholtz.com/blog/2009/10/operation-1100/comment-page-1/#comment-226493 KidDynamite Fri, 16 Oct 2009 13:20:19 +0000 http://www.ritholtz.com/blog/?p=41356#comment-226493 i am shocked that this comes from a "major trading desk" - it's not from an options desk is it? Indices and stocks get pinned around big round strikes because natural hedging of large open interest at those levels draws them to those numbers - whomever is long the options is long "gamma" - they are constantly hedging their exposure by buying LOW and selling HIGH... guess what this does - it "pins" the stock or index at the given level. You have to buy SPY when they are at 109.90 and sell them when they are at 110.10... i'm also surprised that a "major trading desk" would take a swipe at GS"s massive revenues... once the public lynches Goldman Sachs, they'll move on to the next populist target, which very well could be this "major trading desk"... i am shocked that this comes from a “major trading desk” – it’s not from an options desk is it? Indices and stocks get pinned around big round strikes because natural hedging of large open interest at those levels draws them to those numbers – whomever is long the options is long “gamma” – they are constantly hedging their exposure by buying LOW and selling HIGH… guess what this does – it “pins” the stock or index at the given level. You have to buy SPY when they are at 109.90 and sell them when they are at 110.10…

i’m also surprised that a “major trading desk” would take a swipe at GS”s massive revenues… once the public lynches Goldman Sachs, they’ll move on to the next populist target, which very well could be this “major trading desk”…

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