The Smart Investor takes a look at a basic option arbitrage model that can help identify gross mispricings almost immediately
One of the conveniences of Technical Analysis (TA) is that it is applicable across an entire range of markets. So long as there are recurring price-volume changes, TA can be applied. TA can be used to handle futures data fairly easily.
In fact, a lot of the best TA tools were developed in handling commodity futures. Specific tools for meaningful analysis of Open Interest data is also available and adjusting futures data to always reflect the nearest future is also easy.
But classic TA is not possible with Options. It is difficult to project charts of option prices that are visually useful. It is possible to construct tools to match options prices to spot but these are specific to Options analysis.
Most of the useful analysis is numeric. Some options analysis is extremely complex and much of option trading is based on daring bets centred on fundamental considerations.
It is possible to take extremely complicated bets based on what the
