OSCC over bought and over sold options monthly contracts!

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Frequently asked questions!

1.  Can the contracts be separated into Calls and puts?
No. Our premium number is an overall look as an average of the "OSCC Total Option Premium", a composite of all the calls and puts combined. This is what makes our premium value or ATOP independent of the future. To see if a call or put is over priced or under priced as compared to the standard for that commodity you will need to look at our under/over priced option charts.
Here is an explanation of the legends on those charts.
Each data has for parts:

First:	A C or P	C=Call	P=Put
Second:	A I or O	I = in the money strike	O = out of the money strike
Third:	A F or B	F = Front month	B = Back month
Fourth:		A number from 1 to 12	for Jan through Dec

CIF3 means a data line for call over/under priced strikes in the money for a front month of March.
Front months and Back months are used to keep the number of data lines on a chart down to a reasonable number so as to be able to read them. 
CME Feeder Cattle, Milk, Live Cattle, and Lean Hogs. have front and back months. These four will have one premium chart that covers the front months 1 to 181 days to expiration and a second premium chart that covers the back months 181 to 360 days to expiration.
The CME Eurodollars ZE and the S&P 500 and the CBT Corn, Soybeans Soybean Meal, Soybean Oil and Wheat also have front and back years.  These seven have one premium chart that covers the front year 1 to 360 days to expiration and a second premium chart that covers the back year 361 to 720 days to expiration.
All the rest have only a front month covering 1 to 360 days to expiration..

2. Please define over sold and over bought and steady.
Over sold:
This means that the ESPDC has been moved down. The charts or list  have to observed to watch for the over selling to stop before taking advantage of this information.
Over Bought:
This means that the ESPDC has been moved up. The charts or list  have to observed to watch for the over buying to stop before taking advantage of this information.
Steady:
This means that the options are decaying at their normal or standard rate and only have benefit to hedgers.

3. If the rating is +5 the options are too expensive and should be sold?
Yes, provided they have peaked out. If the Option Premium Momentum (OPM) is rising however, probably not  If the OPM is falling  you can consider it after checking other indicators.

4. If the rating is -5 the options are to cheap and should be bought?
Yes, provided they have bottomed out. If the Option Premium Momentum (OPM) is falling however, probably not  If the OPM is rising  you can consider it after checking other indicators.

5. If the options for the 2 contracts below are a +5 ,  and your direction is rising does this mean that the value of the options are rising to the highest level with a reading of +5, but cannot yet be sold because you see the direction to continue rising? 
Yes, it would not be recommended until it has stopped rising, If it turns steady, it doesn't mean it cannot start rising again. Check the OPM. The + is missing in front of the number because Excel does not put it there.

Date	Exch	Product	Contract	Rating	Direction	Last update	Rae	Dir
4/23/07	CME	NASDAQ 100	Dec-07	5	Rising	04/13/07	4	T
4/23/07	CME	S & P 500	Mar-09	5	Rising	04/13/07	5	F

6. If you say the direction is falling with a +5, then one could look to possibly sell the over bought option with the +5 reading?
Yes, that would be the time to check other indicators for the sell signal. Also check the OPM.

7. Your options below have a -4, -4, -3, -3 readings and your direction is falling does this mean that the value of the options are falling with the -4 & -3 readings, getting very low, but cannot yet be purchased because your direction indicates they will continue to get more oversold and continue in that direction? 
Yes We have no way of telling how over sold an option contract can get.

Date	Exch	Product	Contract	Rating	Direction	Last update	Rae	Dir
4/23/07	CME	Eurodollar	Jun-07	-4	Rising	04/13/07	-4	F
4/23/07	CME	Feeder Cattle	Apr-07	-4	Falling	04/13/07	-3	F
4/23/07	CME	Lean Hog	Apr-07	-3	Falling	04/13/07	-3	F
4/23/07	CME	Lumber	Nov-07	-3	Steady	04/13/07	-3	S

8. If they are already getting too oversold and your direction is showing it to go lower one might not want to really sell for a short position as the option may continue down with the already oversold readings of say -4? 
Yes, That is correct. However, when they get this over sold they are apt to change direction at any time. Check the OPM.

9. Would it be correct to say that one should not buy the oversold options because your directions indicates a continued fall?
Yes again! Especially if the OPM is also falling.

These tables are a summary of our charts.

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Tables that show:

Options that in our opinion are over bought with a rating of +1 to +5

Options that in our opinion are over sold with a rating of -1 to -5

Options that in our opinion are steady with a rating of 0.
  with special notes on some commodities.

Go to this page for our rating definitions.

Go to this page for an explanation of how we look at the Adjusted Total Option Premium (ATOP)     

If you still have questions make comment in our blog.

We also have a new "chart explanation page" to help explain what these charts show and how to use them.
For a better understanding of what we do please read these pages.
--- About Us What we found that prompted us to develop our option program.
--- The OSCC overview of option trading.
--- The OSCC Option Model.
--- Products
--- The Accuracy of the OSCC Option Model.