Thursday, October 22, 2009

GS options (Oct 22, 2009)

Just wish to share with you on my observations on GS option activity. GS started the descend on the 14th of October.



Imagine if you had purchased a put on the 180 strike price....You will only be be making real money beginning from 20th of October. Amazing isn't it..?
Point is GS made a lower high on 20th of October....but the decrease in volatility on that day made the put options on the 180 strike price seem ineffective.



On the other hand if you have shorted the sector using FAZ, you tend to get a higher high for this instrument when XLF was making lower lows.


On the other hand, if you have sold calls options at the 190 strike price. You can really see a huge difference....of course...I am not saying that writing calls is for everybody....just look at the gaps downs...if that had been a gap up...that could blow your account....lol



Another way is to buy deeper ITM puts like the 190 strike price....of course that will be more expensive...lol

My Strategy moving forward: Watch out for buy signals between 175 - 180.

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