tag:blogger.com,1999:blog-878354647175476723.post339521648532113249..comments2023-04-07T07:51:46.366-04:00Comments on Erik's Market Blog: Dont overpay for your options on levered ETF'sErikhttp://www.blogger.com/profile/12581489893598823737noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-878354647175476723.post-17849150250070296412009-03-30T20:33:00.000-04:002009-03-30T20:33:00.000-04:00no, 6 put and 17.5 call. they were both the first...no, 6 put and 17.5 call. they were both the first ITM strike price so I picked them.MarkyMarknoreply@blogger.comtag:blogger.com,1999:blog-878354647175476723.post-29683656094733406972009-03-30T20:00:00.000-04:002009-03-30T20:00:00.000-04:00Mark, are you comapring the FAZ 25 calls to the ...Mark, are you comapring the <BR/><BR/>FAZ 25 calls to the FAS 5 puts?<BR/><BR/>just making sure....Erikhttps://www.blogger.com/profile/12581489893598823737noreply@blogger.comtag:blogger.com,1999:blog-878354647175476723.post-91906078851549381142009-03-30T19:31:00.000-04:002009-03-30T19:31:00.000-04:00http://stockstop.org/viewtopic.php?f=2&t=940FA...http://stockstop.org/viewtopic.php?f=2&t=940<BR/><BR/>FAZ calls: 8.70/7.80= +11.54%<BR/>FAS puts: 1.775/1.50= +18.33%<BR/><BR/>1st day.MarkyMarknoreply@blogger.comtag:blogger.com,1999:blog-878354647175476723.post-65773319479871439792009-03-30T08:32:00.000-04:002009-03-30T08:32:00.000-04:00See I think the other tricky thing is the VIX and ...See I think the other tricky thing is the VIX and premiums. Buying puts on SKF or FAZ may not make much sense because even as the price goes up, the VIX is likely dropping along with premiums so you're not getting the same bang for the buck. Perhaps is priced in however. I'm not good with the greeks.MarkyMarknoreply@blogger.comtag:blogger.com,1999:blog-878354647175476723.post-71587873923614174702009-03-29T23:01:00.000-04:002009-03-29T23:01:00.000-04:00Four FAS 5 puts vrs One FAZ 25 call?let me kno...Four FAS 5 puts vrs One FAZ 25 call?<BR/><BR/>let me know what the results are, i do want to know, for conformation.<BR/><BR/>Just mathmatically seems like a MUCH MUCH better value to get the FOUR fas puts, but do let me know so its backtested.<BR/><BR/>I have em both on my watch list as well, so we can see. (unless the market goes up for the entire month of april...lol then we will never know heheh). <BR/><BR/>shall see how they look in a week or 2 from now. My strong opinion is the four fas puts will destroy the 1 faz call.Erikhttps://www.blogger.com/profile/12581489893598823737noreply@blogger.comtag:blogger.com,1999:blog-878354647175476723.post-88147255689721149012009-03-29T22:45:00.000-04:002009-03-29T22:45:00.000-04:00For the sake of argument, let's assume the market ...For the sake of argument, let's assume the market tanks hard before may opex....I know, that's a real stretch (not)<BR/><BR/>Let's assume FAZ doubles or triples from its current price of about 20.<BR/><BR/>Let's also assume FAS tanks to 1.50, a new low. It is safe to say FAZ would double from here if FAS were to hit 1.50.<BR/><BR/>fayed faz 20 may calls asking price 6.20<BR/><BR/>faz at 30 means profit of 3.80, or 61%<BR/>faz at 35 means profit of 8.80, or 1.4x<BR/>faz at 40 means profit of 13.80, or 2.2x<BR/>faz at 50 means profit of 23.80, or 3.8x<BR/>faz at 60 means profit of 33.80, or 5.4x<BR/><BR/><BR/>fasqf fas 6 may puts ask 1.70. Fas at 1.50 means profit of 2.80, or 1.65x<BR/>fasqa fas 5 may puts ask 1.15. fas at 1.50 means profit of 2.35, or 2.04x<BR/>fasqg fas 4 may puts ask 0.70. fas at 1.50 means profit of 1.80, or 2.57x <BR/><BR/>abbie...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-878354647175476723.post-69355419751083127642009-03-29T22:42:00.000-04:002009-03-29T22:42:00.000-04:00Erik, you got me curious so I paper traded some FA...Erik, you got me curious so I paper traded some FAS puts vs. FAZ calls as close to the same $ value as possible, let's see what happens! Unless the market goes up, we should see roughly what happens, these were april expiryMarkyMarknoreply@blogger.comtag:blogger.com,1999:blog-878354647175476723.post-45558384894742748772009-03-28T23:46:00.000-04:002009-03-28T23:46:00.000-04:00Good observation, Erik. However, Jan, Feb 2009 sta...Good observation, Erik. However, Jan, Feb 2009 standard dev(FAZ)=12.31 and std(FAS)=6.27. The ratio of the two std is: 12.31 / 6.27 = 1.96. The ratio of respective coefficients of variation is 2.38. So by this measure we could say that FAZ puts are a better buy than FAS calls. Of course one needs to use all parameters (std, price, time ...) to get the "fair price". After that it's a crap shoot... like everything else in this game :)<BR/>I enjoy your postings here and on the boards<BR/><BR/>Keep up the good work!<BR/><BR/>tue_07yAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-878354647175476723.post-20661037202233627372009-03-28T19:08:00.000-04:002009-03-28T19:08:00.000-04:00what a nice post. very clear and thoroughlinuswhat a nice post. very clear and thorough<BR/>linuslinushttps://www.blogger.com/profile/01378930926954018790noreply@blogger.comtag:blogger.com,1999:blog-878354647175476723.post-61086514821237516322009-03-27T22:01:00.000-04:002009-03-27T22:01:00.000-04:00Fil,.60 = 60 DollarsOptions are EXTREMLY risky, an...Fil,<BR/><BR/>.60 = 60 Dollars<BR/><BR/>Options are EXTREMLY risky, and require much more discipline than stocks. Total differant animal. Please read up and verse yourself well, and never risk more than you are prepared to lose. A .60 option can go to .05 in a day. Just had to put that out, fwiw, regardless ok.<BR/><BR/>http://www.thinkorswim.com <BR/><BR/>is a good site for some reading up on options.<BR/><BR/>http://www.ivolatility.com/calc<BR/><BR/>has a free options calculator to estimate what options will be worth, depending on whatever variable you input, etc.<BR/><BR/>Hope that helps...Erikhttps://www.blogger.com/profile/12581489893598823737noreply@blogger.comtag:blogger.com,1999:blog-878354647175476723.post-7320139589028659002009-03-27T21:38:00.000-04:002009-03-27T21:38:00.000-04:00Hi Erik. I love your blog and your analysis. I'm a...Hi Erik. I love your blog and your analysis. I'm a newbie in options arena so I have a couple of questions. I see in yahoo that the ask price for FAS 5 puts is 0.6. How many of these can someone buy at this price ? If FAS goes to 3 what do you think this put will cost?<BR/><BR/>Thank you very much!<BR/><BR/>FilAnonymoushttps://www.blogger.com/profile/05930309563504005217noreply@blogger.com