Anna! Not bad :)
October 27, 2006 at 2:54 am 8 comments
In response to the comments and questions about these trades, Anna wrote you a letter. See it here: http://tradealert.wordpress.com/2006/01/30/letter-from-anna-regarding-risk-calculation/
Entry filed under: Successful Trades. Tags: .
1.
Colin | October 30, 2006 at 1:59 am
Hi Anna!
How did you possibly get such good rates for these straddles? I ran trade alert and the prices that came up was:
Symbol IV HV Min Straddle
HAR 41.65% 18.20% $7.50
NVT 78.37% 23.64% $4.75
GYI 44.29% 26.61% $4.50
AFFX 53.91% 29.54% $4.60
These were all above their respective min jump an hour before market open. Plus the IV and HV discrepancies were huge. Am I using trade alert wrongly or is trade alert giving me wrong numbers?
Apprecitae any feedback, thanks!
Colin
2.
anna | October 30, 2006 at 3:56 am
I used strangles, not straddles, becacuse stock price was not close enough to any strike price, and the expected moves on the stocks was big enough to go strangle.
3.
anna | October 30, 2006 at 3:59 am
No, Colin you are not getting wrong numbers. I wrote a long answer to these questions (Vic asked me, too) so hopefully that would give you some information on how and why i traded these stocks.
4.
J. Doshi | October 30, 2006 at 4:12 am
Hello Anna,
I’m a newbie, just started my first E.S. paper trade friday. If it’s not too much trouble, could you email me your “long answer” reasons for your trade? email: jogeshdoshi@gmail.com.
5.
Benjamin Boyle | October 30, 2006 at 4:35 am
Hey Colin,
Anna’s written a reply which I’ll post under a password-protected filing in the education section later today or tomorrow.
From your use of the word “wrong” above, I wanted to make a point:
There are lots of trades we don’t take that end up profitable. Were we wrong when we decided not to take the trade? Not necessarily … perhaps the trade was risky. Lots of risky trades end up profitable, but lots of them end up the other way too.
Sometimes people trade and have a win, and we say “Congratuations, you got it right”. But, if they took a risky trade and luck was on their side this one time, did they really get it right?
The market likes to fool us by letting us take risky trades and have some luck … just enough times to get us really confident and put in the big capital before everything turns upside down.
By the way, Anna carefully measures her risk on every trade she takes. She is always right, haha
Cheers / Ben
6.
J. Doshi | October 30, 2006 at 6:06 am
Ben – Very timely comments to a newbie like me. I look forward to a paper loss when market opens tonite for some useful lessons when luck is not on for side!
Thanks for your posting Anna’s analysis – will look at it when it’s up. Cheers. Doshi
7. Letter from Anna regarding risk calculation « Trade Alert user comments | October 30, 2006 at 11:16 am
[...] Anna! Not bad
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8.
Colin | October 31, 2006 at 11:50 am
Hi Anna!
Thanks for sharing. Could you also share how you calculated the ‘support’ for the various IV curves? Also, since NVT had no info on whether it was going to announce BMO or AMC, how did you know when to place your trade?
Hi Ben!
I agree with you – the market likes to fool us into thinking it is safe and then wham! by the way, – off topic but where can I find info on how to interpret the rewards/risk chart?