Really Not Organized...

After reading my old posts I realize how disoriented I am. The stock market sucks. Makes life difficult and confusing. I wish I did not lose so much in '08. Now I have to make significant ground. Anyways what I mean to write is to hopefully, before the end of the month post an excel spreadsheet of my progress. I clearly have failed to do that, and there is no excuse.

Now to get myself even more confused I want to document an interesting discovery for the SPX weekly options. (Take note that there options that expire on a weekly bases. CBOE- Chicago Board Options Exchange had provided certain options to expire either at the end of a Thursday or Friday of a trading week.) I love these options because I am winning. I feel I am better when I make a weekly trade then a monthly or daily. Its not to say I would not lose more or win more. It is just my preference. In any case if your curious CBOE's link about weekly options:
http://www.cboe.com/micro/weeklys/introduction.aspx

1. SPX (Settlement on a Friday Morning.)
2. XSP (Mini-SPX, Settlement on a Friday Morning.)
3. OEX (100 of SPX Components on a 1/10th size, Settlement on the end of a Friday trading day.)
4. XEO ((European 100 of SPX Components on a 1/10th size, Settlement on the end of a Friday trading day.)

A word of caution these options except for XEO, are cash settlements. That means on settlement day there is no ownership in the stock when you hold one of these expired options. Instead you either pay the difference or recieve the difference in price between your option and the strike price. For instance if you purchased an OEX call option at 400 and at Firday's settlement the strike price of OEX was 440, you actually get $40*100 minus the premium for purchasing the option. There is no stock purchase and vise-versa if you sold a call, or also known as naked short a call or covered call, at 400 you would automatically be required to pay $40*100=4000 and minus the premium you got for selling the call. The "100" simply comes from the fact the the option is actually worth a multiple of $100. Hey I did not make the rules.

There is a subtle difference in XEO versus OEX. You can settle OEX at any time before or at the end of the OEX option expire date. XEO on the other hand can only be settled on settlement date. I only see this difference as a drawback to trading the XEO options but then again there maybe a scenerio where XEO would be better than OEX.

I babble long enough and still haven't posted my discovery on the SPX. For the week of June4 options on SPX as of Friday, June 19th's closing price the picture below are the vertical options.

Notice the 900/925 put options have a mark of $8.40 when the intrinsic value=present value is only at $3.77. There is a big volume of 144 put contracts traded versus 22 call contracts on the 900/925 spread. The put spread has over 200% difference between the instrinsic and mark value and on top of that the instrinsic value of the call spread is a little over 25%! Either someone or the market is telling us this upcoming week is a down week. I am playing on that and will trade through OEX instead because the contracts do not have such a spread between the intrinsic and present values relative to the quantity of contracts traded so far.