Et voila', first Lock Limit Day of my life on Cotton.
Broker: " Cotton is locked at 17% more then yesterday price, you can't sell at more than that price"....
So, my question:Is it always possible to trade on LLD or today is it just a special day?
Thank you
Cotton Lock Limit Day
Excuse my ignorante, which contract was 17% up? I coannot find it.
Edit: excuse my typos too, I sometimes forget to switch languages on this spelling checker.
Edit: excuse my typos too, I sometimes forget to switch languages on this spelling checker.
Last edited by cordura21 on Fri Feb 18, 2011 11:00 am, edited 2 times in total.
As stated above, you can most definitely sell on lock limit up days, and buy on lock limit down days. But just because something is locked limit does not mean it cannot unlock. Today is a perfect example, where CT was lock limit up, and now has reversed and gone lock limit down!
So just because something gets locked, it does not mean that it cannot unlock sometime before the close if some other news comes out, or a huge order comes in the other direction, etc. Simply requires extra diligence.
Kinti -- you can also use the synthetic to price out what the market is currently thinking the "real" price is for the underlying, outside of the lock. Regardless, I've always wondered how the option marketmakers off-load their risk in such situations, since they cannot trade the underlying in one direction at all? Just blow out the vol to an insane level?
So just because something gets locked, it does not mean that it cannot unlock sometime before the close if some other news comes out, or a huge order comes in the other direction, etc. Simply requires extra diligence.
Kinti -- you can also use the synthetic to price out what the market is currently thinking the "real" price is for the underlying, outside of the lock. Regardless, I've always wondered how the option marketmakers off-load their risk in such situations, since they cannot trade the underlying in one direction at all? Just blow out the vol to an insane level?
Option traders trade the greeks, i.e. delta,gama,vega, theta and rho.MarkS wrote:I've always wondered how the option marketmakers off-load their risk in such situations, since they cannot trade the underlying in one direction at all? Just blow out the vol to an insane level?
You can reduce your delta (market direction) also using other options, with different strikes and expiries.
Best regards, as ever