In my down time ( I only have one trade on right now ) I was looking at different option prop firms.

VTrader

jc trading group

Simplex

EchoTrade

DRO|WST

cassandratrading

Archelon

I am trading SUNW June 5 Calls right now. Their prices have been over the place more than I expected. On the 26th something funny happened. Volume was up a lot. In the morning , SUNW traded more than 50,000 calls, mainly in a single trade. On the tape was a single print of 37,893 at $.16 from the ISE. It was reported that this may be a closing trade of calls bought on May 19th for $.58. If so, someone took a bath in SUNW calls. And , I am just thinking, what marketmaker is doing that kind of size? Had that market maker been buying calls to balance her position since May? Moving paper is moving paper after all.

The thing that three days later, SUN is at 5.30 and those calls are in the money. A difference of $454,716 at the last price. But since you have already lost $1,591,506, it would not be a good day anyway.

In the true spirit of disclosure, I got whacked on SUNW Calls also, but I will be ok. It actually moved my position to a better point looking at the greeks. Non greeks, not so much.

Ahh the AAPL iPhone release. I , without a dougt think it will be a great product. That being said, on to tradng. I am looking at the chart and I see a top. The news and the date have been in the news sooo much, I can only think that that information has already been priced into the stock.

We look at the IV, and it is spiking. I have been watching the IV for a while, and AAPL usually does not hold and IV over 45% for very long except for earnings.

SO here is my take, after the announcemet a drop in IV and a slight decline in the price. “Buy the rumor, Sell the fact”, has worked well for me with AAPL. I am looking at the 140/145 Call spread. The 135/140 is an option, but with a lower IV. Since we expect a drop, the 140/145 is a better option.

[Update : AAPL went down from the start of the session. I could not make the trade, at my parameters, so I didn’t make the trade. Never rush a trade.]

When we talk about skew, we are talking about the difference in implied volatility (IV) between contracts. Implied volatility represents what real people/market makers feel that the future volatility will be. The volatility going forward.

So if for example a JUL Call has a IV of 18% and the AUG call has an IV of 30%, people are voting with their money that something will happen , such as an earnings call, between JUL and AUG.

The skew is the difference between the two. We calculate skew by subtracting the next expirations volatility from the next month out.

A slight positive skew is normal, while a negative skew represents that traders think something will happen in the near term. In the example, that would be a positive skew of 12% ( 30% - 18% )

Remember, “Greater the skew, greater the move”

Doesn’t work. Sorry.

In my last post, I mentioned picking up theta over the weekend. Just because it happens , do not think that you can come into the market on Friday morning, sell options , and then capture the weekend theta decline. The market makers already know this and start adjusting the IV down to account for the weekend on Friday morning.

Now, if you already have a position, you are good.

Have a great weekend !