JDSoCal
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Aspiring oligarch
Posts: 4,182
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Post by JDSoCal on Sept 25, 2012 23:10:36 GMT -8
A new day. Will the puts call out the bears?
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Mav
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Post by Mav on Sept 25, 2012 23:11:24 GMT -8
That reminds me. Mind a quick refresher about pain range theory for the studio audience? (The range is obvious, the methodology I forget.)
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JDSoCal
Member
Aspiring oligarch
Posts: 4,182
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Post by JDSoCal on Sept 26, 2012 0:07:05 GMT -8
That reminds me. Mind a quick refresher about pain range theory for the studio audience? (The range is obvious, the methodology I forget.) OK, for all newcomers (and Mav), Pain Range Theory: My pain range theory is an offshoot of Travis Lewis's percentage pain range theory (ranges where AAPL won't close, so you can sell options outside of said ranges) which itself is an offshoot of max pain (actual integer closing number). All assume that AAPL trades as a derivative of options, instead of the other way around, at least on Thursdays and Fridays (and often late Wednesdays) when big news or sentiment doesn't trump this effect. Because the vast majority of long options are bought by retail investors, and thus most short options are written by market makers, this has created a paradox: The more bullish option investors are (buying calls), the more MM's dump common shares to hold the stock price back and have calls expire worthless; and the more bearish options investors are (buying puts), the more rocket fuel the stock gets by MM's buying common shares to pump the price to kill puts. The method I use presupposes that there is a clear $5 range which separates the top puts and top calls. Above the top put strike, and all those puts get killed; below the top call strike, and the maximum # of calls get wiped out. So maximum pain to retail options buyers, maximum gain by Evil Overlord option writers. So, as of Tuesday PM's #'s, Strike | Calls | Puts | 670 | 3,225 | 14,796 | 675 | 6,119 | 11,154 | 680 | 7,332 | 11,272 | 685 | 7,631 | 9,743 | 690 | 14,320 | 9,838 | 695 | 12,017 | 5,467 | 700 | 19,306 | 6,338 |
Here, any close on Friday 685 or above wipes the most puts, and so long as AAPL closes @ 689.99 or below, the most calls get wiped. The above chart is nice and easy; Each put strike 685 and below is greater than its corresponding call, and each call strike above 690 is greater than its corresponding put. Easy, breezy, beautiful. But sometimes, it isn't so clear, like when there are weird spikes in OE all over the place (e.g., look at Oct monthlies, 700, 750, inter alia). The big problem is, yes, this is a moving goalpost, as options positions open and close all week long. And we don't get the "current" numbers until several hours after each day's closing. Last week, we didn't see the smoking gun numbers until after Friday's close - 700 puts overtook 700 calls during the day on Friday, so we got a 700.09 close that seemed aberrant, but it wasn't when the final numbers came out. I don't recall it coming down to the wire like that before. This is why something must be done to make these numbers much more real time and transparent. Another caveat is what I call hybrid mode. Sentiment/news can kill pain range in a given week, but that doesn't mean pain won't still have some influence, i.e., save a strike or two that the EO's don't have to pay off. And finally, there is the Luther Ingram Rule: If closing above pain rage is wrong, I don't wanna be right. That is, I hope we are in sentiment mode every week. The only real solution is, Apple needs to have some kind of really cool product release or announcement every week. Or all weekly call buyers need to be rounded up and shot.
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Post by moltenfire on Sept 26, 2012 1:46:05 GMT -8
Thanks for the lesson, JD. Where do you get the updated OI numbers in such a nice chart?
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Post by davidcv100 on Sept 26, 2012 3:47:00 GMT -8
Thanks for the lesson, JD. Where do you get the updated OI numbers in such a nice chart? I am not sure what source JD uses, but you can use the following link optionsclearing.com/webapps/series-searchThe data is updated around 10pm est after each trading day. I agree with JD, however, that it should be updated realtime, wonder if the MMs have the realtime data . . .
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Post by rutgersguy92 on Sept 26, 2012 4:26:55 GMT -8
That reminds me. Mind a quick refresher about pain range theory for the studio audience? (The range is obvious, the methodology I forget.) OK, for all newcomers (and Mav), Pain Range Theory: My pain range theory is an offshoot of Travis Lewis's percentage pain range theory (ranges where AAPL won't close, so you can sell options outside of said ranges) which itself is an offshoot of max pain (actual integer closing number). All assume that AAPL trades as a derivative of options, instead of the other way around, at least on Thursdays and Fridays (and often late Wednesdays) when big news or sentiment doesn't trump this effect. Because the vast majority of long options are bought by retail investors, and thus most short options are written by market makers, this has created a paradox: The more bullish option investors are (buying calls), the more MM's dump common shares to hold the stock price back and have calls expire worthless; and the more bearish options investors are (buying puts), the more rocket fuel the stock gets by MM's buying common shares to pump the price to kill puts. The method I use presupposes that there is a clear $5 range which separates the top puts and top calls. Above the top put strike, and all those puts get killed; below the top call strike, and the maximum # of calls get wiped out. So maximum pain to retail options buyers, maximum gain by Evil Overlord option writers. So, as of Tuesday PM's #'s, Strike | Calls | Puts | 670 | 3,225 | 14,796 | 675 | 6,119 | 11,154 | 680 | 7,332 | 11,272 | 685 | 7,631 | 9,743 | 690 | 14,320 | 9,838 | 695 | 12,017 | 5,467 | 700 | 19,306 | 6,338 |
Here, any close on Friday 685 or above wipes the most puts, and so long as AAPL closes @ 689.99 or below, the most calls get wiped. The above chart is nice and easy; Each put strike 685 and below is greater than its corresponding call, and each call strike above 690 is greater than its corresponding put. Easy, breezy, beautiful. But sometimes, it isn't so clear, like when there are weird spikes in OE all over the place (e.g., look at Oct monthlies, 700, 750, inter alia). The big problem is, yes, this is a moving goalpost, as options positions open and close all week long. And we don't get the "current" numbers until several hours after each day's closing. Last week, we didn't see the smoking gun numbers until after Friday's close - 700 puts overtook 700 calls during the day on Friday, so we got a 700.09 close that seemed aberrant, but it wasn't when the final numbers came out. I don't recall it coming down to the wire like that before. This is why something must be done to make these numbers much more real time and transparent. Another caveat is what I call hybrid mode. Sentiment/news can kill pain range in a given week, but that doesn't mean pain won't still have some influence, i.e., save a strike or two that the EO's don't have to pay off. And finally, there is the Luther Ingram Rule: If closing above pain rage is wrong, I don't wanna be right. That is, I hope we are in sentiment mode every week. The only real solution is, Apple needs to have some kind of really cool product release or announcement every week. Or all weekly call buyers need to be rounded up and shot. Nice job, JD.
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Post by Plato on Sept 26, 2012 4:53:08 GMT -8
That reminds me. Mind a quick refresher about pain range theory for the studio audience? (The range is obvious, the methodology I forget.) OK, for all newcomers (and Mav), Pain Range Theory: My pain range theory is an offshoot of Travis Lewis's percentage pain range theory (ranges where AAPL won't close, so you can sell options outside of said ranges) which itself is an offshoot of max pain (actual integer closing number). All assume that AAPL trades as a derivative of options, instead of the other way around, at least on Thursdays and Fridays (and often late Wednesdays) when big news or sentiment doesn't trump this effect. Because the vast majority of long options are bought by retail investors, and thus most short options are written by market makers, this has created a paradox: The more bullish option investors are (buying calls), the more MM's dump common shares to hold the stock price back and have calls expire worthless; and the more bearish options investors are (buying puts), the more rocket fuel the stock gets by MM's buying common shares to pump the price to kill puts. The method I use presupposes that there is a clear $5 range which separates the top puts and top calls. Above the top put strike, and all those puts get killed; below the top call strike, and the maximum # of calls get wiped out. So maximum pain to retail options buyers, maximum gain by Evil Overlord option writers. So, as of Tuesday PM's #'s, Strike | Calls | Puts | 670 | 3,225 | 14,796 | 675 | 6,119 | 11,154 | 680 | 7,332 | 11,272 | 685 | 7,631 | 9,743 | 690 | 14,320 | 9,838 | 695 | 12,017 | 5,467 | 700 | 19,306 | 6,338 |
Here, any close on Friday 685 or above wipes the most puts, and so long as AAPL closes @ 689.99 or below, the most calls get wiped. The above chart is nice and easy; Each put strike 685 and below is greater than its corresponding call, and each call strike above 690 is greater than its corresponding put. Easy, breezy, beautiful. But sometimes, it isn't so clear, like when there are weird spikes in OE all over the place (e.g., look at Oct monthlies, 700, 750, inter alia). The big problem is, yes, this is a moving goalpost, as options positions open and close all week long. And we don't get the "current" numbers until several hours after each day's closing. Last week, we didn't see the smoking gun numbers until after Friday's close - 700 puts overtook 700 calls during the day on Friday, so we got a 700.09 close that seemed aberrant, but it wasn't when the final numbers came out. I don't recall it coming down to the wire like that before. This is why something must be done to make these numbers much more real time and transparent. Another caveat is what I call hybrid mode. Sentiment/news can kill pain range in a given week, but that doesn't mean pain won't still have some influence, i.e., save a strike or two that the EO's don't have to pay off. And finally, there is the Luther Ingram Rule: If closing above pain rage is wrong, I don't wanna be right. That is, I hope we are in sentiment mode every week. The only real solution is, Apple needs to have some kind of really cool product release or announcement every week. Or all weekly call buyers need to be rounded up and shot. Thank you my friend - appreciate your input and thoughts. One question - don't yo think that most traders that hold weekly puts/calls do trade these on a daily basis? Meaning they don't wait until OE to get them exercised or expired? I know I am just a little fish in the big pond, but I day trade weeklies only, never hold them over night - way too risky!
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Post by mbeauch on Sept 26, 2012 5:04:22 GMT -8
Down in PM, oh goody.
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Post by qualitywte on Sept 26, 2012 5:07:06 GMT -8
Ok, so we sell a few thousand less iPhone5s than we would have without the maps FUD, then turn around and sell 40 million more next year to the Chinese with CM on board. (They like the Apple Map App)!
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Post by Plato on Sept 26, 2012 5:11:49 GMT -8
Down in PM, oh goody. Stop the whining - wait for the stock to hit support (around 650ish IMO) and then load up the boat! ;D
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Post by mbeauch on Sept 26, 2012 5:16:54 GMT -8
Down in PM, oh goody. Stop the whining - wait for the stock to hit support (around 650ish IMO) and then load up the boat! ;D Boat is pretty full and leaking terribly. That is why I am whining.
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Post by Rupert on Sept 26, 2012 5:17:06 GMT -8
Resistance/Support Wednesday 09/26/2012
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Post by Plato on Sept 26, 2012 5:27:43 GMT -8
Stop the whining - wait for the stock to hit support (around 650ish IMO) and then load up the boat! ;D Boat is pretty full and leaking terribly. That is why I am whining. Oh I see - sorry for the leaking. I feel your pain. Hope you have either common shares or LEAPS, so the pain is not too bad. Hold tight, this boat might rock for quite a bit longer, but calmer sea is ahead.
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Post by moltenfire on Sept 26, 2012 5:33:18 GMT -8
Broke through S1 at the opening.
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Post by mbeauch on Sept 26, 2012 5:33:57 GMT -8
WOW, right out of the block it drops that much, unbelievable.
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Post by podboy on Sept 26, 2012 5:43:28 GMT -8
Wish I had some more dry powder. Is it stupid to purchase common with a margin account? Using margins only seem useful for options where the returns are greater.
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Post by Plato on Sept 26, 2012 5:52:54 GMT -8
The good news is we are reaching oversold territory on the daily - and that normally gives us a nice bounce.
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Post by hamourabi on Sept 26, 2012 5:58:17 GMT -8
I think Apple could start soon its share buyback strategy
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Post by incorrigible on Sept 26, 2012 6:15:17 GMT -8
Sold some shares and rolled into Jan 14 $450 calls @ 237.79.
Selling way overdone IMO.
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Post by dreamRaj on Sept 26, 2012 6:24:01 GMT -8
I'm being a little cautious before I put in cash in some short-term buys because of a feeling that there's one more pullback coming.
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Post by Lstream on Sept 26, 2012 6:24:28 GMT -8
Well, I have started to put some of the cash to use. Entered some Nov 665/675's. Have an April stink bid in, that most likely will not get filled.
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Post by Plato on Sept 26, 2012 6:28:23 GMT -8
Sold some shares and rolled into Jan 14 $450 calls @ 237.79. Selling way overdone IMO. I disagree. Look at past stock performance. Whenever retail investors think selling is way overdone and see a small bounce they jump back into the stock. Just then the big boys take another bite out of AAPL and tank it even more. I would wait until we see convinced buying and move above resistance on high volume. I don't think we have seen the LOD yet, IMHO.
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Post by po1nt on Sept 26, 2012 6:31:40 GMT -8
Sold some shares and rolled into Jan 14 $450 calls @ 237.79. Selling way overdone IMO. I disagree. Look at past stock performance. Whenever retail investors think selling is way overdone and see a small bounce they jump back into the stock. Just then the big boys take another bit out of AAPL and tank it even more. I would wait until we see convinced buying and move above resistance on high volume. I don't think we have seen the LOD yet, IMHO. I agree. I'm looking for the 650's. Also VXAPL is starting to run up pretty good.
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Post by artman1033 on Sept 26, 2012 6:36:22 GMT -8
JD: do it like this, but in color:
artman1033 - 14 July 2010 07:09 PM artman1033 - 14 July 2010 04:58 PM artman1033 - 14 July 2010 01:44 PM Current conditions: 10:31 AM Eastern Biggest volume puts and calls AAPL @252.17 with 7,716,028 shares traded. PUT/CALL RATIO .674
IMPLIED JULY OPTIONS VOLATILITY 42.82 July 250 call @ 9,452 today. OI 46,454, was 42,565, $4.50 July 260 call @ 9,618 today. OI 43,592, was 37,314, $.77 July 240 Put @ 9,031 today. OI 37,781, was 35,394, $.35 July 250 Put @ 8,445 today. OI 35,825, was 34,471, $2.26
Current conditions: 1:00 PM Eastern Biggest volume puts and calls AAPL @253.70 with 17,909,045 shares traded. PUT/CALL RATIO .607
IMPLIED JULY OPTIONS VOLATILITY 41.02 July 250 call @ 22,621 today. OI 46,454, was 42,565, $5.35 July 260 call @ 29,869 today. OI 43,592, was 37,314, $.83 July 240 Put @ 15,850 today. OI 37,781, was 35,394, $.26 July 250 Put @ 21,852 today. OI 35,825, was 34,471, $1.55
Current conditions: 4:00 PM Eastern Biggest volume puts and calls AAPL @252.72 with 28,849,000 shares traded. PUT/CALL RATIO .688
IMPLIED JULY OPTIONS VOLATILITY 37.66 July 250 call @ 34,033 today. OI 46,454, was 42,565, $4.20 July 260 call @ 52,364 today. OI 43,592, was 37,314, $.42 July 240 Put @ 28,111 today. OI 37,781, was 35,394, $.19 July 250 Put @ 44,291 today. OI 35,825, was 34,471, $1.38
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Post by lance on Sept 26, 2012 6:38:46 GMT -8
Group question for anyone who would like to respond to it, I read “Foxconn produces at present around 150,000 iPhone 5s a day and is paced by Pegatron that is producing only about 10,000 units in each day.” So 160000 new iphone 5s daily. We know at 5 million sold this resulted in apple selling out of iphone 5 in 3 days, so their inventory is selling as fast as it is made, assumption is they probably sold another 2 to 3 million this week, the max they can make for sure. So max 7 to 8 million phones sold before October 2012. From October to December 30th, 2012 that leaves like 90 days to make as many iphone 5s and sell them. This leaves max 15 million iphone 5s created and sold. We know iphone 4 and 4s inventory are probably built up so they will sell as many version as possible of the older phones, but demand is not the same as iphone5. Most will want iphone 5, so what implication will this have on q4 2012 eps estimates and q1 2013 eps estimates for apple?
As we all know q1 2013 is probably the most imporant earnings for the stock in the past 2 years. I am just posing three questions to the group:
a) is this 160000 units a day correct and will this number rise aka new hires at foxxcon?
b) what are people think for q4 2012 eps estimates and iphone numbers taking into account iphone5 sale of max 8-10 million in q4
c) What are people thinking about q1 jan 2013 earnings how many total iphones sold? Thank you any response will be appreciated
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Post by mbeauch on Sept 26, 2012 6:47:17 GMT -8
I would wait until we see convinced buying and move above resistance on high volume. I don't think we have seen the LOD yet, IMHO. I agree. I'm looking for the 650's. Also VXAPL is starting to run up pretty good. This is going to get ugly before it gets any better. Oversold is irrelevant. I have to believe we test 656 (our previous support). This whole Spain thing is just an excuse to tank the world. As for AAPL, there has to be a shakeout day. Here is my big concern, the weekly chart looks awful now. What irks me the most is there will be a day where the market is going to fake people out, then the real pain will come. This just sucks.
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Post by mbeauch on Sept 26, 2012 6:56:20 GMT -8
I don't think WE know anything about how many units are being made each day. There is always a ramp-up process. Don't think for a second anyone knows what Foxconn is producing. Mr. Gao is very good at keeping things secret. When did they start building, I don't know and outside of Apple, very few do.
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Post by dreamRaj on Sept 26, 2012 7:04:41 GMT -8
Added to my Jan 13 750 position.
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Post by hellojapan on Sept 26, 2012 7:14:31 GMT -8
JD, I think it's bad luck when you make the intraday thread
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Post by Lstream on Sept 26, 2012 7:24:08 GMT -8
JD, I think it's bad luck when you make the intraday thread The day ain't over yet.
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