What is the best way to examine share price and option price movements to make ready for an option purchase?

I am thinking of watching day highs and lows for in the money calls and puts for several symbols and going from there. Is there anywhere I could find historical charts and data on such things or will I have to tough it out and retrieve data over a period of time?

I realize I could use some sort of calculator, but doesn't the volatility figure into the formula for options value?

<<<What is the best way to examine share price and option price movements to make ready for an option purchase?>>>

If you want to look at past price movements a chart is likely to be the best way to do so. I am not sure how that would make you ready to buy an option.

<<<I am thinking of watching day highs and lows for in the money calls and puts for several symbols and going from there. Is there anywhere I could find historical charts and data on such things or will I have to tough it out and retrieve data over a period of time?>>>

You can get historical charts at BigCharts. For example, here is a basic chart on the GEAH option.

http://bigcharts.marketwatch.com/quickch...

(Note that you need to include an "=" before the last two characters in options symbols at that site.)

You can use the advanced chart facility to compare the movement of the underlying with the movement of an option if you wish.

<<<I realize I could use some sort of calculator, but doesn't the volatility figure into the formula for options value?>>>

I agree that since implied volatility contributes to the price of an option it would be difficult (and inaccurate) to use an options calculator to determine prices of past trades.

There are also times when the value of using charts is questionable. For example, if the underlying drops 20% in a day, say from $25 per share to $20 per share, and there is only one trade for a particular option on the underlying that day, it could make a big difference in the price if the option was trading $25 or $20.

Tags

　　Small Business 　　Renting & Real Estate 　　Personal Finance 　　Investing 　　Insurance 　　Credit 　　Corporations

Related information

Do you buy options using limit buy purchases or market price orders and why or why not?

Because the options markets are still not very liquid, limit orders work best (though you will miss some entries). In very liquid contracts, like in the Qs, which also have tight spreads with a lo...

What will the $500 Billion influx of credit from european banks do for the US Stock Market?

I dont think so. Even after fed and EU central bank cut the interest rates recently, the prime mortgage rate and the LIBOR rate actually increased this month, instead of decreasing. Which means, th...

Unless the US Government buys and sells stocks, isn't it pretty much a given that the US Stock Market is heade

The events of 1929 proved that unregulated capitalism is not a viable economic model. Regulated capitalism is, however, proven to be the best mechanism to creating the most wealth for the most p...

The secrets of the clever Corporate Bond Investor?

You are certainly correct in the fact that you have to be clever to buy bonds. They are a great deal more difficult to buy than stocks. There are a couple of reasons for this. One is that the ma...

Does the bid/ask price on an option spike as much for long term long positions as it does for the shorter term

<<<Does the bid/ask price on an option spike as much for long term long positions as it does for the shorter term long positions?>>> In general, assuming you are talking about ...

What does it mean when the S & P futures are up or down before the market opens?

The S&P futures usually indicate the short-term (intraday) direction of the market. It frequently doesn't have any bearing on the way the market will close, because of the multitude of ne...

Has anyone ever had a bad experience?

No, but always do your homework: ask question, require proof and check backgrounds before you part with your money. And remember the golden rule: if it sounds too good to be true, most likely it...

Stock market help...?

Standard investment advice is that you should invest in a diversified mix of stocks, bonds, and money market funds. You want to buy a diversified portfolio of stocks as individual stocks are too ri...