Things to confirm before trading the October contract
Hello, I am Nikkei OP Trader, the administrator.
Thank you very much for visiting this blog.
I would like to provide information that can be of some help to everyone, so please support me.
Now, the theme this time isThings to confirm before trading the October expiration.
From today, the October expiration becomes the main “battlefield.”
Therefore, today I have summarized the points you should remember when trading.
（1） The SQ for the October expiration is on Friday, October 13.
★There are five weeks until the SQ, so it is one week longer than usual.
★ You might think it's nothing, but in terms of rate, it is 25% longer.
★ For options, the longer the time, the greater the time value becomes.
★ In other words, the time decay is slower, so sellers need to be careful.
Note) The time value of options is proportional to the square root of the remaining days, while other conditions are kept constant.
＜Standard Deviation: SD＞
33 days ago (September 11) 1122
26 days ago (September 18) 996
19 days ago (September 25) 852
12 days ago (October 3) 677
5 days ago (October 10) 437
Note) The Nikkei 225 VI is calculated assuming a 360-day year.
As described above, the time value decay for this October expiration is relatively mild, so sellers need to be very careful.
（2） Increase in volatility
★ The level of the Nikkei VI on September 8 was 19.22, up 2.01 from the previous day.
When volatility increases, option prices rise theoretically even if other conditions remain constant.
This is another point sellers should be aware of.
Thus, for sellers, the market situation is against the trend (against the position).
Considering that the 13th is a Friday and that the year ends with a 7 (2017), PUT selling should be approached cautiously.
Note) The above is my personal view and is intended only to improve financial literacy. Therefore, it was not created for investment solicitation. Please make the final investment decisions at your own risk.
＜Please click to support me. Thank you. m（_ _）m＞
