July 19, 2013 HFT Stocks & Options Commentary with @pnavarro88

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March 15, 2013 HFT Stocks & Options Commentary with @pnavarro88

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Initial Balance Levels for $SPY, $GOOG & $QQQ

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Initial Balance Levels for $SPY, $GOOG & $QQQ

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Daily Equity Markets Commentary

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Daily Market Commentary

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Special Case of Weekly Options (GOOG Example) | Options Like a DPM Webinars #6: Strangles

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http://hamzeianalytics.com/pow_register.asp - In the Q&A segment of this Options Strangles educational webinar, the Admiral answers a question about weekly options and their extreme dynamics due to the closeness to expiration. The Admiral, a former CBOE Designated Primary Market Maker, explains the potentials, dangers, and considerations for trading weekly options.

This a Q&A excerpt from "Trade Options like a DPM Webinar #6: Strangles" - http://hamzeianalytics.com/pow_register.asp




"STRANGLES" OPTIONS WEBINAR DESCRIPTION (October 20, 2010, 1800 CT)

An options strategy where the investor holds a position in both a call and put with different strike prices but with the same maturity and underlying asset.


ABOUT "THE ADMIRAL"

The featured speaker, whom we affectionately call "The Admiral," was a Designated Primary Market Maker (DPM) on the floor of the CBOE for five years. Although we're not using his real name (so don't ask!) suffice it to say that we consider him to be one of the most knowledgeable option traders on the planet. As a floor trader in the '80s and '90s he did the opening options rotation for 5-25 stocks the old-fashioned open outcry way—meaning he opened each option strike price for each of these stocks within the first 30 minutes of trading, both calls and puts.

That meant he had to price more than 500 option strikes, plus as a market maker he traded and kept the markets current. As a DPM, technology brought forth auto-quoting of option series, but pricing of those quotes remained his responsibility. Trading 1 million shares of stocks and 50,000 options contracts was a normal day for him. In 27 years at CBOE, he has traded through the crash of '87, the smaller crash of '90 and the tech bubble in 2000. He has traded three-digit volatility and seen every possible market environment imaginable. So, if you're going to learn options, it might as well be from the very best.

Equity Index Update (Special Edition)

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Brad Sullivan

The index markets suffered through a sharp decline in the afternoon trade after a JP Morgan analyst cut revenue estimates for the Chinese Internet company BIDU (Baidu.com). The stock plunged from 358 per share to 303. Other staples of the momentum side also slid as GOOG dropped from a new all-time high of 641 to 622 on the close…AAPL fell sharply as did DRYS. The NQ market participants were clearly caught off guard as the index cratered from 2210 to 2160 in 30 minutes of trading…the subsequent bounce proved short lived and another round of selling pushed the index to the session lows of 2146 a solid -2% drop for the afternoon from high to low.



The interesting aspect of the decline was the second wave of selling. It was during this wave that the broader market came along for the ride on the downside…GS gave back its entire session from Tuesday’s FOMC minutes rally and the stock settled at 229. The examples of this type of price action were found everywhere by the close and one has to wonder if a confluence of forces that have been the underpinning of this rally (global growth, commodity boom, no inflation…so on so on) is being rethought. Certainly, a one day reversal should not cause a top in this long running bull market…and for the bears hoping that we have finally turned the cards over to the “sell” side of the ledger I would advise caution. There needs to be more technical work done on the downside in order to generate a price ceiling of significance. In the short run, it would appear that a rally back to yesterday’s highs would be a stretch. So…where does that leave us?

From a day trading perspective, much of the move was accomplished (at least in terms of velocity and price discovery) in yesterday’s swoon. The SPZ went BELOW the September Employment Report session low (1558.25) and some mild sell stops pushed the index to session lows of 1556.25. However, this low was still HIGHER than the GAP left from that very Employment report (1552.25). The subsequent short covering bounce into the close pushed the index towards 1565 – that close is on slightly lower on the week and does not represent the low close of the week as that was accomplished on Monday at 1562.75. In fact, only the NQ and ER2 contracts closed at new weekly lows. Essentially, this boils down to patience and a little bit of reality. Yes the markets are overextended and the fact that a revenue downgrade of a Chinese Internet company could put so much pressure on the marketplace proves that point. However, to make the leap from the trade in BIDU to an overall slowing of the China Story may be a bit of a stretch. In my opinion, we witnessed a rare news event that led to a bit of a buyers strike. Whether or not that continues today will be fascinating, particularly as we head into earnings season. My advice is to lay low and look for a few opportunities, particularly early, for selling rallies. Psychologically the market took a hit and some of that should carry into today.

Equity Index Update

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Brad Sullivan
January 30, 2007

The index markets continued to trade on a dollar flow rotational basis as large caps were weighed down for the second session in a row. Meanwhile, small caps continued to catch a strong bid that began around mid-session on Friday. The Russell 2000 --- notably the only index of the five I follow not to make a new trading high during the past several weeks --- found continued strength as players seem to be rotating money back into small caps.

The session was marked by light volume and moderate trading ranges as players anticipate what is in store for the remainder of the week. On that front, today will bring Consumer Confidence expected at 110. In addition, MSFT released Vista and INTC announced a new chip yesterday. Yet, the indices remain a bit sluggish ahead of the FOMC meeting and earnings from GOOG on Wednesday. Furthermore, the overhang of Friday’s employment report continues to leave the market with overhead supply in the near term.

I have enclosed a rather sobering look at the complete meltdown in volatility across the index board. The chart captures the Russell 2k, SPX, NDX, DJIA and Midcap 400 with their respective 22day standard deviation readings, the 200 day MA of that 22 day STDEV reading and the 10day standard deviation readings. It is interesting to note that only the NDX is trading near its 200 day MA of the 22 period reading, the other indices remain around the -50% level from their respective MA levels. Simply put, this is telling me that something is bound to change in terms of intraday trading ranges, the only question is when?