[rocky9281]

It "appears" that the price of a future or option is derived from the price of its underlying. In turn, price of the underlying is determined by supply demand conditions prevailing in it.

So, if we can understand supply/demand conditions of the underlying, we will be able to gauge future direction of the future or option.

Do we need anything more to understand FnO?

Do they have their own supply-demand game?

How can Time and Sales of FnO help if FnO is priced according to the respective underlying ONLY, and not because of its own supply-demand conditions?

[Tams]

Originally Posted by rocky9281 »

It "appears" that the price of a future or option is derived from the price of its underlying. In turn, price of the underlying is determined by supply demand conditions prevailing in it.

So, if we can understand supply/demand conditions of the underlying, we will be able to gauge future direction of the future or option.

Do we need anything more to understand FnO?

Do they have their own supply-demand game?

How can Time and Sales of FnO help if FnO is priced according to the respective underlying ONLY, and not because of its own supply-demand conditions?

What "appears" to you is often not what it was...

the are many academic papers in this subject... a search in university websites will give you plenty of late night reading material.

[rocky9281]

Please tell me whether trading FnO with its own Time and sales is sufficient or not

[Pippovic]

With regards to options I don't think it's solely a matter of supply and demand of the underlying. It certainly is a big factor of the pricing model. The AMOUNT of supply/demand (volatility) plays a role, the SPEED of which the underlying changes, including the time decay until expiration and any unforeseen circumstances.

S&D would be good indicators for a future direction but how are you going to determine that in advance?

As far as I know about futures, I believe that supply/demand plays a bigger role there and you probably can determine future directions a bit more easily because of circumstances (weather conditions, wars, natural disasters etc.). But again, how do you know in advance?

So in my opinion Time and Sales alone are not good enough but certainly help.

[rocky9281]

Here I am posting a T&S screenshot.Assuming that the transactions are going on live right now,please let me know about what can inferred from this T&S as the current transactions are going.

Does this screenshot prompts us to buy immediately, sell immediately or do nothing or something else?

[BlowFish]

I'll play

Aggressive/impatient/anxious sellers have been prepared to hit the bid to sell/go short. They have traded about 200 contracts. Despite this the inside bid has increased from 150 offered to 800+ offered by patient potential buyers. Several things could happen from here. Impatient buyers could enter the market, Impatient sellers could withdraw or patient buyers could withdraw (cease bidding / pull contracts). Not much can be said about patient sellers from this section of the tape. Of course which combination occurs will determine what happens to price.

[rocky9281]

Originally Posted by BlowFish »

They have traded about 200 contracts.

Hi BlowFish, how did you arrive at this "200" figure?

Another thing, can you please direct me to resources (books,ebooks,websites etc.) where I can learn about how to trade with Time and sales ?

[BlowFish]

Actually looks like it is more like 240 / 250. I simply looked at the black prints marked trade (and totalled them roughly in my head). They all appear to be at the best bid.