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Options As A
Contrary Indicator
Description: certain aspects
of options can be used as contrary indicators of the
broad stock market or of individual underlying stocks,
futures, or indices. The main two such indicators are
implied volatility and option volume. Learn how to use
VIX (implied volatility) and put-call ratios (option
volume) as contrary indicators. Examples show the
history of these approaches. Current charts show what
these important indicators are saying about the current
state of the stock market, crude oil, etc.
Outline:
Part 1: Implied Volatility As A Contrary Indicator
VIX; History of VIX/VXO
Implied Volatility Buy Signal
Warning of a Price Explosion
The Seasonality of Volatility
Part 2: Option Volume As A Contrary Indicator (Put-Call
Ratios)
Standard Ratios
Dollar-Weighted Ratios
Stocks and Futures with good put-call signal history
Biography: Lawrence G. McMillan is the author
of Options As a Strategic Investment, the best-selling
work on stock and index options strategies, which has
sold over 200,000 copies. The fourth edition of this
work was released in March, 2002. In addition, he has
written two other books, McMillan On Options (2nd
edition, 2004) and Profit With Options and co-authored
another, New Insights On Covered Call Writing. He
currently authors a unique daily advisory service –
Daily Volume Alerts – which selects short-term stock
trades by looking for unusual increases in equity option
volume. He also edits and publishes "The Option
Strategist", a derivative products newsletter covering
equity, index, and futures options, as well as "The
Daily Strategist", covering much the same strategies but
on a daily basis. In these capacities, he is the
President of McMillan Analysis Corporation, which he
founded in 1991. He has spoken on option strategies at
many seminars and colloquiums in the United States,
Canada, and Europe. He also writes frequently and is
quoted in publications such as Barron’s, Technical
Analysis of Stocks and Commodities, Data Broadcasting’s
“Exchange” magazine, Futures Magazine, theStreet.com,
and Active Trader Magazine. In addition, he is the
Portfolio Manager of The Hardel Volatility Arbitrage
Fund (a hedge fund), he trades his own account actively,
and he manages option-oriented accounts for certain
individuals.
Prior to founding his own firm, Mr. McMillan was a
proprietary trader at two major brokerage firms. He
began his Wall Street career as the retail option
strategist at Thomson McKinnon Securities, Inc., from
1976 to 1980, and then traded the firm's proprietary
account beginning in 1980. From 1982 to 1989, he was a
Senior Vice President in charge of the Equity Arbitrage
Department. Following that, he was in charge of the
Proprietary Option Trading Department at
Prudential-Bache Securities in 1989-90. In those
positions, he traded the firm's own money – primarily in
advanced option strategies and risk arbitrage at Thomson
McKinnon, and primarily in convertible Euro-bonds and
Japanese warrant arbitrage at Prudential.
He initially worked for Bell Telephone Laboratories in
Whippany, NJ, from 1972 to 1976. He also published a
weekly newsletter, entitled "Hedged Option Strategies"
from 1974 to 1976.
Mr. McMillan holds a B.S. degree in mathematics from
Purdue University (1968) and an M.S. in applied
mathematics and computer science from the University of
Colorado (1972).
Contact Information
McMillan Analysis Corp., PO Box 1323, Morristown, NJ
07962
800-724-1817
Fax: 973-328-1303
email:
info@optionstrategist.com
web site:
www.optionstrategist.com
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