Friday, January 06, 2006

Conundrum

Welcome to my first post as the newly emerging "blogger trader" type. At some point I'll write up a snippet about myself and my style, but for now I'll restrict my posts to a few comments about the current state of the market and go from there.

Conundrum is the name of the game here with NDX-100 up 21.59 after three days of up-and-up-and-up action. Why conundrum?

Well, for option sellers (yours truly), it's too late to sell Jan premium and a little too early to start using the margin for Feb. Plus, after VIX just punching though 11 (on the way down), selling premium gets dicey.

On the other hand, for option buyers (or net long delta types), it is almost worse:

1. Jan is way too close with theta growing at exponential rate
2. Feb could be ok, but with market being in this position, the question of up or down is a tough one to get an edge on.

So, net net, long is a gamble and short is very low odds. Thus, we sit and stare at our screens in frustration. Naturally, the frustration comes from not being able to do better than we already have.

Well, money on the side is better than no money at all :)

Cheers,
/Dmitry

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