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Investor's Business Daily said something similar in ther bond column in
section B of the issue for Monday. Sounds likely to me. After all, if you
wanted to buy bonds at a discount and could figure a way to manipulate
the price down, wouldn't you? I heard the commercials in the grains and
meats do the same thing?
Phil
bobrabcd@xxxxxxxxxxx wrote:
>
> Just a thought, next week there are 3yr, 10yr, 30yr auctions. Isn't it
> common practice for bond houses and other savy traders to short bonds going
> into the auctions? Doesn't this make them more attractive to ensure the
> sale of the new paper? Don't those same houses and the piggyback traders
> cover those shorts during and immediately after the sale. Just maybe so
> many were expecting bonds to reverse here anyway that their stops were up
> tight and what is normally a perturbation in the charts became a rout. Any
> bets that bonds will stabelize next week during the auctions?
>
> BobR
>
> At 06:16 PM 8/3/97 +0100, 5150@xxxxxxxxxxxxxxx wrote:
> >In refernece to one of my prior articles, another RT was kind enough to
> >send me a correction. I've left the correction unattributed because it
> >was sent as a direct email and not generally posted, probably out of
> >considereation for me. So...
> >
> >What caused me to make this remark about volatility was that I usually do
> >trade it but in this case I wasn't.
> >
> >In fact, after Friday's close my thought was to wait 1-3 days if a
> >congestion develops before recovering the 118's so I could wait for the
> >volatility to calm down after Friday's move. Sure glad I made the mistake
> >on paper and not for real!
> >
> >Phil
> >
> >My old article clipped...
> >> >Two days ago I sold the DEC 118 calls near their highs of the day at 1'23.
> >> >Yesterday I had to withstand the heat for a day which was not fun, as the
> >> >calls got punched up to 1'36 and slightly more today at the open. They
> closed
> >> >today at '46. I'll get two more days of theta decay over the weekend, plus
> >> >a lowering of volatility (options traders, don't you just love that
> sucking
> >> >sound of volatility imploding when you're short premium?) and it should be
> >> >time to think about protecting profits or just getting out.
> >> >
> >> >
> >
> >The correction...
> >> Congratulations on your good trade, but I think you're wrong in expecting
> >> volatility to DROP after a huge move in the bonds. Implied volatility was
> >> already extremely low to begin with, and a move like this will generally
> >> "spook" the market, so option premiums tend to INCREASE because of implied
> >> volatility increases. You were on the right side of the market, so you'll
> >> make money anyway, but it's becuase you were right on price direction, not
> >> implied volatility direction.
> >
> >
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