Cotton Lock Limit Day

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marriot
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Cotton Lock Limit Day

Post by marriot » Thu Feb 17, 2011 11:39 am

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

kianti
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Post by kianti » Thu Feb 17, 2011 12:10 pm

Not a special day, at least not in the last few months.
You cannot trade futures.
Options are open, if I'm not mistaken
You could build a very expensive synthetic long or short futures position in options.... if yours Versailles-style mansion is at risk and still have margin :shock: :( :shock:

RedRock
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Post by RedRock » Thu Feb 17, 2011 1:49 pm

If I understand, of course you may sell at the limit up price. Plenty of buyers. Someone who wants to buy will be thankful to you. Buying, forget it. ?Are the back months locked too? Sometimes you can trade the backs. Ive been a spectator in CT for a while now, oh well.

marriot
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Post by marriot » Thu Feb 17, 2011 2:03 pm

I am a stupid chicken, i have never stopped to think on the purpose of a lock limit day.
Seem obiuovs that i can sell on a lock limit up.
Last edited by marriot on Thu Feb 17, 2011 11:51 pm, edited 1 time in total.

LeviF
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Post by LeviF » Thu Feb 17, 2011 3:05 pm

RedRock wrote:Ive been a spectator in CT for a while now, oh well.
Not in your portfolio?

RedRock
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Post by RedRock » Fri Feb 18, 2011 1:26 am

LeviF wrote:
RedRock wrote:Ive been a spectator in CT for a while now, oh well.
Not in your portfolio?
filtered for now

cordura21
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Post by cordura21 » Fri Feb 18, 2011 9:19 am

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. :wink:
Last edited by cordura21 on Fri Feb 18, 2011 11:00 am, edited 2 times in total.

marriot
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Post by marriot » Fri Feb 18, 2011 10:17 am

My typo, it was 7%.

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Post by MarkS » Fri Feb 18, 2011 2:22 pm

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?

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Post by kianti » Sat Feb 19, 2011 3:53 am

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?
Option traders trade the greeks, i.e. delta,gama,vega, theta and rho.
You can reduce your delta (market direction) also using other options, with different strikes and expiries.

Best regards, as ever

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