Agreed, all noise as far as trend analysis is concerned.
McMillan's focus is on unusual and sharp increases in near expiration option volume as it may reflect insider trading and thus short term share price direction. He does suggest that contraction in overall option volatility is a negative indicator of overall market trend.
--Light volume in options today. The next few days may reveal more trend indications.
i never understood how one could find trends based on options trades - there is so much noise in them. i, for one, will probably be trading around 250 october contracts tonight and tomorrow, but simply for purposes of rolling them over to new november contracts.
diogenes1234 - Open interest decreased today.
The trends since mid Sept has been increasing open interest but that has slowed. And, today it contracted - albeit just a little - but still contracted.
Light volume in options today. The next few days may reveal more trend indications.
Interesting, to me at least, that Friday's trading at the close should be followed by today's Blockbuster coverage of the Blixt and Schindler appointments. Dating back a month ago, not even News but Comment, or more accurately Spin. The Meisters still at work. As if the major issue facing Krispy were the Trans-Fat Nonsense. As if Blixt and Schindler can divert the pending Class Actions, Criminal and Regulatory Investigations, and Operating/Financial Problems or offset the Greed of Silverpoint. Next we may look for Rabbinical guidance on the vexing Kosher issue.
Or maybe the impending the Blixt/Schindler press coverage wasn't behind Friday's closing action after all. No confirming Call action Friday, and today the JAN 7.50 and 10.00 Put trading continues. Maybe it was something else. Money flows, and secrets are not long kept in the financial world -- inside information has a short life. Let's wait and see.
Diogenes - Option activity was interesting today (12 Oct). Only 947 calls but 6357 puts. The big buying on the puts took place in the last hour 2/3 in the last 30 minutes.
On 5 Oct, I noticed a big buy of about 8000 options (both calls and put) then a few days later a big �sell interest message� for 500,000 shares.
It will be interesting to see if we have another big �sell interest� message in a couple of days.
I now have McMillan's presentation "The Predictive Power of Options." Excellent stuff in my opinion. It will take some study and thought, but little is pertinent to Krispy's rather unique situation -- low share volume, low option volume, consistantly very high implied volatility, and gruesome fundamentals.
-- Options can be of value both as positive and contrary indicators.
-- Implied V is the most significant parameter.
-- No reference is made to open interest.
-- Spikes in near Put or Call volume are short term positive indicators but only where average trading is 5,000 or more contracts per day.
-- Put/Call ratio including all strikes and all expirations measured over 20 days is important as a loose contrary indicator.
More later as I review my notes.
I apologize for the poor choice of words. "--My best guess is that majority of options are linked to the underlying security with the cheaters being the small percentage like that �naked short sellers� were."
I meant to tie the word cheater to nake short sellers. This is how I should have written it....
--My best guess is that majority of options are linked to the underlying security the and those without shares being a small percentage which is similiar to the situation where cheaters that sold �naked short sellers� were a small percentage.
I stand corrected.
--I personally think all but the longest term options on this POS should be avoided. It's certainly headed down in the long term as investors and traders savvy that it is has become a smallish company with limitted realizable growth and profit potential and adjust the share price appropriately.
amen to that! that's why i've written 170 jan 7.5 calls and 150 jan 5 calls on this thing. given the declining number of factory stores, lousy financials and soon to follow disappointing overseas results, i'm expecting a nice dip over the next few months. the only saving grace for this stock is if they eventually file the financials (which should give it a nice pop as long as they don't disclose anything disastrous).
--My best guess is that majority of options are linked to the underlying security with the cheaters being the small percentage like that �naked short sellers� were.
that's probably right, but i'm not sure what a "cheater" is. i currently have written 321 call options and 286 put options and do not have the stock hedge the calls nor have i sold the stock short to hedge the puts. am i bad?
Diogenes � I start with the Call/Put Oscillator and call-put ratio. Then I scan the prices of the options sold that day (both calls and puts) to see if I can detect any extra premium. To do this I look at the price and the time that the options sold and then look at the price of the underlying security at the same time that the option sold.
Not an exact science. I am just looking to get a feel for what is trading.
Maybe meme has something better that we could both learn from.