The use of options
years back when I had some market classes, options were talked of. The "beauty" of options, your risk was limited (if you
bought them). While, not always a 1:1 tracking with their associated contract, they generally followed the value.
I think we understand the "human nature" of the "gone to far" movement in the markets....hard move one direction
one way, usually a slight reversal the next, unless there was something significant, the would encourage the continued
move in the same direction.
But as of a while now, the options are becomming more disconnected from their contracts.....in other words, the
1:1 tracking has become much worse...in some instances, it would take a 5 cent move to make a 1 cent move in
the options value. i can't tell if the short dated option contracts are much better at tracking or not.
i guess what I'm getting at is what I call the "swinging monkey" marketing system........if say a market makes a significant
move, and there is no other significant factors, then before the market closes, place an option order, at the money
in the opposite direction..say wheat went down 15 cents, before the close of that day, place an order for a call........
same if wheat went up 20, issue an order for a put.....but with qualification......there must be "significant moves,
don't think system would work on small moves.....also must keep an ear to he ground about news going on...could
be the markets could continue the same direction.......
The problem i'm having is, the options now tracking the contracts.......so in instances as I said, it takes a 5 cent or more
move to get an option change in some instances........this failure to do close tracking, "kills the monkey".
Unsure why it is not tracking well.......lack of interest, or thin trade ?