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seen Apr 11 '12 at 11:58

Nov
26
awarded  Supporter
Nov
26
comment What are good conditions to roll a leap further out in time?
I see, so are you saying, since most of the time theta is the determining factor, that when volatility spikes up highly, its effect in the price is greater. At this time, the ratio (added to the bottom of the question above), is better for rolling out further in time?
Nov
26
asked Do markets typically fall fast, and rise slowly
Nov
26
comment What are good conditions to roll a leap further out in time?
Thanks. What is it that is the primary determiner of a price then in long term options? It makes sense what you're saying ... people don't expect the volatility to remain the same, but what then is driving that 1 year leap option price (say at the money)? Thanks.
Nov
26
revised Does an option's price “ratio” with the underlying security price?
added 314 characters in body
Nov
26
revised What are good conditions to roll a leap further out in time?
per CQM's answer, some more clarity.
Nov
26
comment What are good conditions to roll a leap further out in time?
Thanks. Can you expand on the last part, why rolling on inflated volatility is good? Obviously one will gain more on the sale, but won't one pay more for the purchase? E.g. Let's say I can sell the nearer term leap for \$5, but have to buy the longer term leap for \$8, paying \$3 more. If market & equity volatility were low, and the nearer term leap was perhaps \$3.50, would the longer term leap likely be more than \$6.50 (\$3.50 + \$3.0), or less? ... I'm going to expand my question so that it's clearer with this.
Nov
26
asked Does an option's price “ratio” with the underlying security price?
Nov
25
revised What are good conditions to roll a leap further out in time?
edited title
Nov
25
revised What are good conditions to roll a leap further out in time?
edited title
Nov
25
asked What are good conditions to roll a leap further out in time?
Nov
17
revised How sensitive are vertical spreads to changes in implied volatility?
added 26 characters in body
Nov
17
awarded  Editor
Nov
17
revised How sensitive are vertical spreads to changes in implied volatility?
didn't get any answers, made question simpler, since want confirmation on the first part, if it makes sense
Nov
17
awarded  Teacher
Nov
16
awarded  Student
Nov
16
asked How sensitive are vertical spreads to changes in implied volatility?