An Introduction to Trading Options
By Administrator on Saturday, September 24th, 2011 | No Comments
The world of options is an exciting one. Unfortunately, many stock market traders and investors miss out on trading options because they do not understand how they work. It is understandable. When someone explains options to you for the first time, you might shake your head and decide to stick with mutual funds. But like anything worth knowing, once you do the investigation, the reward far outweighs the effort.
So in an attempt to help people better understand options, we will present a series of articles starting from the beginning and covering many topics related to trading options. So check back regularly.
So to get started, what are options? The official definition of an option might go something like this:
The right, but not the obligation, to buy (for a call option) or sell (for a put option) a specific amount of a given stock, commodity, currency, index, or debt, at a specified price (the strike price) during a specified period of time.
Wow, well that helps a lot. Okay, let’s try to break that down into simpler terms. First, let’s take the part about a given stock, commodity, currency, index, or debt. Let’s simplify that by saying that we have the ability to buy and sell options for many things. You can buy an option for a stock such as IBM, a commodity such as gold, a currency such as the U.S. dollar, an index such as the S&P 500, or debt such as a bond. So for the purpose of finishing our description of an option, we will use…your car!
Next, “during a specific period of time”. Let’s describe this part by saying that options are contracts that expire. For example, say you told me that I could buy your car from you for the next two weeks at $500. If I wait longer than two weeks, well, I might have to pay more. So we have a contract that expires in two weeks. Simply enough, that contract I just described is an option! It is the option to buy your car from you at $500 for the next two weeks.
Said another way, I have the right, but not the obligation, to buy your car from you for the next two weeks. So why the right, but not the obligation? We signed a contract. That gives me the right to buy your car at $500. But If I choose not to, it is okay. I may have to pay more after two weeks, but I can also choose not to buy it at all.
An option is the right, but not the obligation, to buy something at a specific price for a specific amount of time. That “something” is called the underlying. Now you might ask yourself, “Why would I want to give you the right to buy my car at $500 for the next two weeks, if someone might come along and offer me $1000?”. The answer, because I pay you! That is why it is called “buying the option”. What I get out of buying that option is that I control that car for the next two weeks! I can find a buyer for $1000, buy it from you for $500, and sell it for a profit immediately.
In summary, an option is a contract to buy an underlying at a price for a certain amount of time. As you continue on in your options education, you can look into services that help you trade options such as http://www.5percentperweek.com. Until next time when we take another step into the realm of options, take care!
By: kurt karson
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Stock Trading Options: Do your research well
By Administrator on Friday, September 9th, 2011 | No Comments
Stock options trading can be much profitable in comparison to regular stock trades and investments. While investing, it is always beneficial to have a good amount of knowledge about the type of investment and associated risks. You should be careful about certain things when investing in Options.
If you do not have enough information about the Stock Options, it is important that you do some research first. Buy a book or go to the seminars organized by stock trading companies. Technical terms can be a little complicated as there are different types of trading, buying and selling available. Determine the type of Options you want to try first based upon the investment amount and risk factor. Make yourself familiar with terms like calls, puts, long call, short call, long put, short put, long synthetic, short synthetic, call back spread etc. Read more articles Stock Options Market – Call and Put How to Trade Options – Diversified Trading Stock Options but Still Suffering Concentration Risk Stock Options – the Greatest Wealth Building Tool Ever Invented The 10 Keys to Successful Stock Options Trading Key #6
You can always tap into the vast resources available over the Internet and subscribe to the many Stock and Index trading newsletters, join forums and keep yourself informed about latest trading news.
You can always take advantage of learning through online trading tutorials. These tutorials have videos and other interactive elements that are quite valuable to everyone who is new to trading in stock options. There are a number of courses available online and offline that provide electronic books, memberships, forums, videos, spreadsheets and other useful material. These courses are designed to teach you how to trade carefully in the Stock Options.
This is not all; there are also a number of trading softwares available. These softwares help you simulate and analyze scenarios and have proven to be quite valuable in making informed decisions related to stock trading.
Camelot Derivatives is a leading Australia based derivatives dealing company specializing in the trading of international index options and Stock Options Trading. The company provides valuable advice and in-depth analysis to its customers on stock trading.
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Options Trading Edge
By Administrator on Monday, September 5th, 2011 | No Comments
Many private traders deem that options are thought to be traded by experts with good mathematical skill. There are two reasons why many private traders think so, that are. trading options are too risky and difficult. Many private traders think that it is easier to just trade stocks or futures. So, a simple question, if trading futures or buying stocks looks so much easier and less complex to do, then why options are available to be traded? The actual reason is that options, which are unlike other trading vehicle, can offer a trading edge to the private traders and allow them to cover almost any investment strategy and risk profile with flexibility. In many ways, options are the most superior trading vehicles that many traders use nowadays. To trade options, you certainly do not need to be an expert in financing.
In the book “The New Market Wizards” written by Jack Schwager, concludes that nobody can win without an edge, even you have the world greatest discipline and money management skill. If you trade futures on the All Ordinaries Share Price Index (SPI), you have to know exactly what is your trading edge; particularly, if you are a professional floor trader. With the trading edge, you should able to see the buy and sell orders that coming into the trading pit and also who is buyer and seller. Besides, the speed of execution of your orders and the transaction costs also should able to see. The popularity of the stocks, options and futures is increasing; therefore, many people trade these products. Only a small proportion of these traders apply a real trading edge. The main reasons for the unsuccessful of many private traders in the financial markets are due to the lack of a trading edge, poor risk management and insufficient capital. The key point here is to find an edge, utilize it consistently and use the right risk and money management techniques. When the odds are in your favor, it is better that you learn how to trade options. It is also importantly when the odds are not in your favor, make sure you stand aside. You are doing yourself with the best possible chance of success if you doing so. Trading systems are as many as traders. We won’t trade a system if it doesn’t provide us with some sort of edge. If you have a system, which is able to give you an edge, why not further enhance your edge by trading options in a right circumstance. Before placing a trade, try to get as many factors that going in your favor as possible. By practicing this, you provide yourself with a much greater chance to success in the long run.
Without doubt, with any form of trading, there are no absolute guarantees. You can’t help compared to the many of the people who do not know anything about options and trade without an edge. But, you have a better chance to succeed in the long run and reach your financial ambitions. Flexibilities that can be offered by options are as follows:
i) Profit gained from an accurately anticipating rising or falling market. ii) With a relatively small disbursement, your potential returns can be greatly magnified.
iii) If the market goes to the way that you anticipate, you have unlimited profit potential, whilst you limit your risk by choosing an amount that you afford to risk.
iv) Profit still can be gained by correctly picking options where the market will not go.
v) Profit gained from flat or non-trending phases markets.
vi) Profit gained by letting the time passes by.
vii) Profit gained at an increasing rate when the market moves further in your favor.
Extremely flexible trading tool is option. You can use options trading strategies that are precisely suit your view of market, whilst sewing them closely to your personal risk tolerance level.
People who trade options for a living and as their business will try to understand and apply the principles, which have been outlined in this article. They do so because they know that there is an edge for then to be gained compare to the people who don’t. They are similar to the typical casino gambler if they do not trade with edge; their money will be destined to be lost ultimately. They are exactly like the casino itself if they trade with trading edge. For those people who trade the markets to make their living, you probably don’t have the chance to talk with them. Their occupation looks exotic and these people are imagined as weird mathematical geniuses who could give their money to Kasparov to run it in a chess tournament. The flair of occupational options traders couldn’t be going beyond from the veracity. Although many of the professional options traders who involve in the financial markets are intelligent people, they were not in the genius category. Nevertheless, they have one thing in common among them. They knew and applied certain unique principles in their options trading. The principles that they utilized offered then an edge to successfully trading in the market. Therefore, throughout their options trading life, they earn a good living.
You don’t have to be a professional options trader. The edge offered from the principles to the professional options traders also available to the private traders as well. Practically, these principles can be learnt and applied by yourself and the odds can be helped to put it more squarely in your favor. All the advantages that most of the professional options traders have may not be possessed by you. By using the same principles that they used, you can learn to make your trading more selective. In this way, you too can benefit from a trading edge.
By: Alexander Chong
About the Author:
Alexander Chong -
Author of “Workable Option Trading Strategies”
Author of “Workable Option Trading Strategies”
http://www.makemoneystocks.com/
Trading Options
By Administrator on Wednesday, August 31st, 2011 | No Comments
Option is a legal agreement between buyer and seller to buy or sell security at an agreed price in a certain period of time. It is quite similar to insurance that you pay an amount of money in order that your property is protected by the insurance company. The difference between these two is option can be traded whereas, insurance policy cannot be traded. There are two types of option contracts; call options and put options. We buy call option when we expect the security price will go up and buy put option when we expect the security price will go down. We also can sell call option if we expect the security price will go down and vice versa if we sell put option. Usually, option is counted by contract, one contract equivalent to 100 unit options. 1 unit option protects 1 unit share. So, one contract protects 100 unit shares. Before learning how to trade option, terminologies that you need to know are as follow:a) Strike price: Strike price is the price that is agreed by both buyer and seller of the option to deal with. That means if the strike price of the call option is 35, seller of this option obligates to sell security at this price to the buyer of this option even though the market price of the security is higher than 35 if the buyer exercises the option. Buyer of this option can buy a security with a price that is lower than the market price. If the current market price is $39, the buyer will earn $4. If the security price is lower than the strike price, buyer will hold the option and leave the option to expire worthless. For put option strike price, buyer of the option has the right to sell the security at the strike price to the seller of the option. That means if the put option strike price is 30, seller of this option obligates to buy the security at this price from the buyer if he or she exercises the option even though the market price is lower than this price. If the market is $25, the option buyer will earn $5. It looks like a lot of transactions have been involved; but actually, seller of the option will not buy a security and sell it to the buyer. The broker firm will do all the transaction but the extra money that has used to buy the security has to be paid by the seller. This means, if the seller loss $4, the buyer will earn $4. b) Out of the money, in the money and near/at the money option: Option price comprises of time value and intrinsic price.
Time Value + Intrinsic Value = Option Price
Time value is the amount of money that the option worth due to the time the option has until its expiration date. Longer the time the option has until its expiration date, higher the time value of this option. Time value of an option will become zero if the option has expired. Intrinsic value for in the money call option is the difference between current market security price and option strike price. Conversely, in the money put option’s intrinsic value is the difference between option strike price and current market security price. If the current security price is lower than the call option strike price, this option is an out of the money option. It only has time value. Call option with strike price that is lower than the current market security price is an in the money option. This option has time value and also intrinsic value. Near or at the money option is the option, which strike price is close to the current market security price. c) Delta value: Delta value shows the amount of the option price will change when the security price changes by $1.00. It is a positive value for call option and negative value for put option. It ranges from 0.1 to 1.0. Delta value for in the money option is more than 0.5 and out of the money option is less than 0.5. Delta value for deep in the money option usually is more than 0.9. If the option delta value is 0.6, meaning that when the security price goes up $1, option price will go up $0.60. If the security price goes up $0.10, the option price will goes up $0.06. Usually, $0.06 will round up to $0.10. d) Theta value: Theta value is a negative value, which shows the decay of the option time value. Option, which has longer time to expiry, has lower absolute theta value than option, which has shorter time to expiry. High absolute theta value means the option time value decays more than the low absolute theta value option. A theta value of -0.0188 means that the option will lose $0.0188 in its premium after passage of seven days. Options with a low absolute theta value are more preferable for purchase than those with high absolute theta value.
e) Gamma value: Gamma value shows the change of the delta value of an option when the security price increases or decreases. For an example, gamma value of 0.03 indicates that the delta value of this option will increase 0.03 when the security price goes up $1. Option, which has longer time to expiry, has lower value of gamma than option, which has shorter time to expiry. The gamma value also changes significantly when the security price moves near the option strike price. f) Vega value: Vega value shows the change of the value of option for one percent increase in implied volatility. This value is always positive. Near the money option has higher vega value compared to in the money and out of the money option. Option, which has longer time to expiry, has higher vega value than the option, which has shorter time to expiry. Since vega value measures the sensitivity of the option to the change of the security volatility, higher vega value options are more preferable for purchase than those with low vega value.g) Implied volatility: Implied volatility is a theoretical value, which is used to represent the volatility of a security price. It is calculated by substituting actual option price, security price, option strike price and the option expiration date into the Black-Scholes equation. Options with a high volatility stocks are cost more than those with low volatility. This is because high volatility stock option has a greater chance to become in the money option before its expiration date. Most purchasers prefer high volatility stock options than the low volatility stock options.
Actually, there are twenty-one option trading strategies, which most of the option investors and traders use in their daily trading. However, I’m only introducing ten strategies as follow:a) Naked call or putb) Call or put spreadc) Straddled) Stranglee) Covered callf) Collarg) Condorh) Comboi) Butterfly spreadj) Calender spread
Naked call and put meaning buy call and put option only at the strike price, which is close to the market security price. When the security price goes up, the profit is the subtracting of the security price to the strike price if you buy call and the reverse if you buy put. Call and put spread is established by buying in the money or near the money option and selling out of the money option. When the security price goes up, in the money call option that you buy will generate profit and the out of the money option that you sell will loss money. However, due to the difference of the delta value, when the security price goes up, in the money call option price goes up with a higher rate compared to the out of the money call option. When you deduce the profit from the loss, you still earn money. The purpose of selling the out of the money option is to protect the depreciation of time value of in the money call option, if the security price goes down. However, if the security price continuously goes down, this will cause an unlimited loss. Therefore, stop loss has to be set at certain level. This strategy also has a maximum profit that is when security price has crossed over in the money option strike price. Straddle can earn money no matter the security price goes up or down. This strategy is established by buying near the money call and put option at the same strike price. The disadvantage of this strategy is the high breakeven level. The sum of the call and put option ask price is the breakeven level of this strategy. You only generate profit when the security price has gone up or down more than the breakeven level. If the security price fluctuates within the upside and downside breakeven level, you still loss money. The money that you loss is due to the depreciation of the option time value. This strategy is usually applied for the security, which has high volatility or before the release of the earning report. The maximum loss of this strategy is the total amount of call and put option price. This strategy can generate unlimited profit at either side of the market direction Strangle is quite similar to straddle. The difference is strangle is established by buying out of the money call and put option. Because both the options are out of the money option, therefore, both options have different strike. The maximum loss of this strategy is less than the straddle strategy, but difference between the upside and downside breakeven level is slightly higher than the straddle strategy. For this strategy, the upside breakeven is calculated by adding the total call and put option prices to the call option strike price. While, the downside breakeven level is calculated by subtracting the put option strike price with the total call and put option prices. The difference between the strike prices usually is about 2.50 or 5 depending to which stock that you select to buy with this strategy. If the security price fluctuates within the upside and downside breakeven level, you still loss the money due to the loss of the option time value. Application of this strategy is the same as the straddle strategy. Covered call is established by buying a security at the current market ask price and selling out of the money call option. Selling out of the money option has limited the profit that generated from this strategy. If security price continuously goes down, it will cause an unlimited loss. Therefore, stop loss must be set. When the option has comes to its expiry, if the security price is not moving up significantly, you still earn the total option premium that you have received. If the security price goes up, sure you will earn a limited profit. If the stock price continuously goes down, it will cause an unlimited loss. Therefore, stop loss must be set. Usually, stop loss is set at the security ask price after subtracting by the option bid price. If this security price goes down and passes over the price that you set as stop loss, the loss that is incurred to you is about half of the total option premium that you have received. This is because the delta value of the out of the money call option that you have sold is about 0.4 – 0.5. The out of the money call option strike price must be the closest strike price to the entering security price. Collar is also known as medium covered call. It is quite similar to covered call strategy. It is only added one more step in order that stop loss is unnecessary to be set in this strategy. This strategy is established by buying a security and near the money put option and following selling an out of the money option. Due to the put option that you have bought, it is unnecessary to set a stop loss because put option will protect the security if the security price goes down. However, out of the money option premium that you have collected has to be used to pay for the put option premium. If the security price goes down, you still loss about half of the total put option premium. This is because out of the money call option premium is less than the near the money put option premium. This strategy is for half or one year long term investment. Condor strategy has four combinations. Two of them are for stationary market and the other two are for dynamic (volatile) market. Long call and put condor are for stationary market whereas short call and put condor are for dynamic market. The former strategy involves four steps that are buying and selling in the money and out of the money call option with an equivalent amount of contract. With this strategy, profit can be generated as long as the security price does not fluctuate out from the upside and downside breakeven level. Short call and put condor are for dynamic market, which also involves four steps like the long call and put condor strategy. The difference is that in short call and put condor, the strike prices of the options that have bought must be within the strike prices of the options that have sold. For short call and put condor strategy, profit can be generated as long as the security price has fluctuated out of the upside and downside breakeven level. The upside breakeven level is calculated by adding the whole position total pay out or receive to the highest strike price in the strategy. The downside breakeven level is calculated by subtracting the whole position total pay or receive to the lowest strike price in the strategy. Combo strategy has two combinations that are bullish and bearish combo. Bullish combo strategy is for bullish market and the bearish combo strategy is for bearish market. This strategy involves two steps that are buying out of the money option and selling in the money option. If the security price goes up more than the higher strike price, profit can be generated. But if the security price goes down lower than the lower strike price, loss is incurred. If the security price fluctuates within the higher and lower strike price, you won’t loss anything. This strategy can earn an unlimited profit but also will cause an unlimited loss depending to the market direction and also which strategy you have used. Butterfly spread strategy is quite similar to the condor strategy. It has also four combinations that are long at the money call and put butterfly spread and short at the money call and put butterfly spread. Long at the money call and put butterfly spread are for stationary market and short at the money call and put butterfly spread are for volatile market. Steps that involve in long at the money call butterfly spread are buying in the money and out of the money call option and following selling at the money call option. At the money option means the strike price of this option is quite close to the current market security price. Number of contract of the at the money call option must double the number of contract of in and out of the money option. Profit can be generated as long as the security price does not move out from the upside and downside breakeven range. The upside breakeven level is calculated by adding the total pay out of this position to the highest strike price. The downside breakeven level is calculated by subtracting the lowest strike price with the total pay out of this position. The short at the money call butterfly spread is established by selling in and out of the money call option and following by buying at the money call option. Number of contract of at the money option must be double the number of contract of in and out of the money option. As long as the security price has move out the upside and downside breakeven range, profit can be generated. This strategy generates limited profit and also cause limited loss if the security price does not go to the right direction.
Calendar spread is also known as horizontal or time spread. This strategy is solely used to earn money from the security, which price trades sideway. There are quite number of stocks have this kind of price trend. This strategy is established by selling at the money call or put option, which has a shorter time to expiry and buying at the money call and put option, which has a longer time to expiry. This strategy merely generates the money from the time value of the option. The option that has shorter time to expiry depreciates the time value faster than the option that has longer time to expiry. Usually, the option that has shorter time to expiry is left for expire worthless. The total money that you receive after closing this position will be more than the total money that you have paid out when opening this position. With these ten strategies, you can use to earn money from upside and downside market and also the market that trades sideway.
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Key Facts About Options Trading
By Administrator on Wednesday, August 31st, 2011 | No Comments
Trading options, like the majority investments, has its rewards and negative aspects. It provides an investor the liberty to make choices and put money on a very particular component of the market as well as its trades. As a consequence of the risks involved, trading option can be extremely tricky and a trader or investor can waste a considerable amount of money in no time.
What many people do not realize is that you can purchase options to trade various stocks of similar companies. However, the downside is that this diversification cuts down on the higher profit potential provided by options. Since a single stock is more volatile than the market, that stock can provide you with a much greater profit or loss, depending on the accuracy of your prognostication.
On the other hand, there is a lot more to making good stock options trading decisions than simply being able to prognosticate a particular stock or the entire market, you must also understand the regulations that govern the stock market. You will need to put together a toolkit of resources to analyze market movements and individual stock movements. You’ll also need to set a framework of rules for your own investing, so that you cam make disciplined decisions, rather than reactionary decisions. You need to do more than take the advice of mathematical modeling programs or professional stock prognosticators. You need to understand things for yourself.
Options trading is a great opportunity to risk money in order to make a lot more money, but your chances of success are greatly enhanced by learning how to apply proper stock trading techniques after learning how to analyze stocks and how to interpret stock regulations. It is a matter of patiently pursuing knowledge and learning as you go. Your best chance of success in options trading is through this type of diligent effort.
By: Ernst Cayemitte
About the Author:
Ernst Cayemitte is a contributing author and writes articles on several subjects including options trading. To learn more about options and options trading software or get more tips and advice about options trading, please visit us at http://www.optionstips.net/
Key to Options Trading Success
By Administrator on Thursday, August 25th, 2011 | No Comments
Lately, I have been asked about what I think is the single key that determines if you would make it as a rich man in options trading.
This is an extremely interesting question as I am not someone inclined to believe that any single reason constitutes to the success in anything at all. However, that got me thinking hard and reflecting on my own success in options trading. Then I decided to frame the question a little bit more academically. All things equal, what is the single key to options trading success? All things equal meaning everyone has perfect control over their emotions and will execute flawlessly all orders that they are required to without human errors and that market conditions as well as options trading knowledge is equal amongst all.
Imagine a group of options traders who knows all the options strategies available in options trading and exposed to the same market conditions. What will determine which one or ones of them makes a profit?
I came to a conclusion about what I think is the key to options trading success and that is the exact same key to stock trading success; the ability to pick stocks that will perform exactly as you would like it to.
Yes, sad but true, it’s the same thing in stock trading. You make money only when you buy stocks that goes up or short stocks that goes down.
In options trading, you only make money when you apply bullish options strategies on stocks that go up, bearish options strategies on stocks that go down, neutral options strategies on stocks that remain stagnant or volatile options strategies on stocks that stage quick and explosive breakouts.
You only lose money in options trading when you apply bullish options strategies on stocks that goes down, bearish options strategies on stocks that go up, neutral options strategies on stocks that breaks out and volatile options strategies on stocks that remain stagnant.
This single condition for losing money in options trading is, all else equal, the only key to options trading success; the ability to pick the right stocks or the ability to predict the future direction of a stock or index correctly.
Yes, being able to predict future market or stock direction accurately and consistently is an important skill in investing and is a far more fundamental skill set than knowing all the options strategies there is.
If that is the case, why options trading?
Well, even though the key to success in options trading is largely the same as the key to success in stock trading or any other forms of investment or trading, options trading does have a few tricks up its sleeves to help put the odds in your favor.
First of all is leverage and protection. The ability to risk lesser capital for the same profit or a lot more profit with the same capital already puts the benefit of risk in your favor. Even credit strategies can be low risk if proper stops are used.
Secondly, is the ability to make a profit in more than one direction! Yes, since the key to success in options trading is the ability to “guess” the correct direction the underlying stock or index is going to take, won’t your chances of success be dramatically increased if you could profit in more than one direction? Yes, you only get that in options trading.
For instance, a Bull Put Spread is a bullish options strategy that makes a profit when the stock goes upwards, remains stagnant OR drops a little! Yes, all 3 directions! Won’t your chances of success be dramatically increased with strategies like that?
Yes, the key to stock options ( http://www.optiontradingpedia.com/stock_options.htm )trading success is the ability to pick the right stocks which translates into the ability to accurately and consistently predict the future direction of the underlying stock. Nobody can do that consistently and that is why options trading puts the odds of success in your favor through options strategies that profits from more than one direction.
By: Jason Ng
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Get Rich With Options Trading
By Administrator on Sunday, August 7th, 2011 | No Comments
Options trading is the best thing to do in the stock market right now. Options is a contract that derives its value from the underlying asset like stocks, commodities, currencies, ETFs, bonds and even futures. An options contract gives you the right to buy or sell the underlying asset at a certain price known as the strike price before a certain date known as the exercise date by paying a small price known as premium.
Options can be of two types: 1) Puts and 2) Calls. Calls give you the right to buy the underlying asset whereas puts give you the right to sell the underlying asset at the strike price before the exercise date.
Now options technically speaking are not investments as they have a limited time period before they expire. That time period may extend from a month to a year. LEAPs are Long Term Anticipation Securities and can have a time frame of up to three years. LEAPs are almost like regular options with the only basic difference their long time span. Options are tremendous instruments in the hands of speculators as they provide unlimited upside potential with a limited downside risk.
You can even trade Index Options that are written on Stock Indexes like Dow Jones, S&P 500, NASDAQ, FTSE, DAX and others. In the same manner, you can invest in ETF Options that give you an opportunity to bet on an entire industry or sector instead of betting on a single security. Options on futures provide ultra aggressive investors with a high flying speculative instrument with high return potential. Before investing in options, you need to understand this fact that options can be risky as they have a time window before they expire. So suppose, you think that Google Stocks GOOG are going to rise in the next three months. You buy call options on GOOG. Now, if GOOG does not cooperate and does not rise as you had wanted it to, your options contracts will go worthless! So you always need to be cognizant of the time volatility of options contracts.
What you need is a good course on how to trade options. Chris Rowe is considered to be a master options trader who astonished the trading community in 2005 by not losing even a single options trade in the whole year. You need to learn from him and take a look at his Options GPS Course!
By: Ahmad Hassam
About the Author:
Mr. Ahmad Hassam has done Masters from Harvard. Learn these Candlestick Patterns. Discover the Internal Strength System – The Ultimate Stocks, Options and ETF Investing System by Chris Rowe.
Rich Options Trading, Poor Options Trading
By Administrator on Friday, July 29th, 2011 | No Comments
After reading the book “Rich Dad Poor Dad” by Robert Kiyosaki, I came to realize that not only is there a rich and poor path in life but also a rich and poor path in options trading as well. Many options traders experience defeat in their options trading career, especially during the first few months, because they are unknowingly walking down the poor path in options trading. There are many differences in the approach winners take in options trading versus the losers and we shall outline and explore some of these in this article.
Rich Options Trading :
1. Speculative directional options trading using direct call or put options buying only with a small percentage of their fund and only on the stocks with the best chances.
2. Extensive use of Option Greeks in order to dynamically hedge a position when conditions change.
3. Always doubt one’s own conclusions and make provisions for losses.
4. Always have a stop loss policy already in place or in mind. Stop loss points can be in the form of contingent orders or trailing stop orders.
5. Understands the exact options trading style that suits them. Emotional options traders should stay out of day trading.
6. Know that there is no one best way to trade every single situation.
7. Do not chase after profitable trades that have been missed earlier on.
8. Satisfied with a steady, consistent gain.
9. Into options trading for the long run.
10. Think options trading education for a start.
11. “Trades” the market.
12. Keeps a trading log.
13. Learn from mistakes.
14. Understands technical and fundamental analysis.
Poor Options Trading :
1. Speculative directional options trading using direct call or put options buying with all their money hoping to hit a “big one” on stock picks taken from the TV or non-professional friends.
2. Has no idea what option greeks are at all.
3. 100% confidence! Full steam ahead!
4. Realize it’s too late only when it’s too late.
5. Follow whatever options trading style that is supposed to produce extra-ordinary gains only to completely break the rules and your pocket.
6. Stick to only one way of options trading for all market conditions and situations.
7. Missed a trade, watched the price go up and then enters it at that new high price only to see prices tumbling like a rock thereafter.
8. Always looking for ways to make more explosive gains from stock options only to have the dynamite eventually exploding in their face.
9. Start options trading with the purpose of quitting after hitting a big profit.
10. Think money making for a start.
11. “Plays” the market.
12. Forgets the last trade made.
13. Hates mistakes and tries to forget mistakes.
14. Mystifies and follows technical analysis superstitiously.
Well, as you can see from the list of differences above, the difference between rich options trading and poor options trading is not only a matter of technique or method but also a matter of attitude and mental approach. Only when the right mind meets the right technique does rich options trading happen. Are you making any of the mistakes that poor options trading makes?
By: Jason Ng
About the Author:
Options trading-Binary digital options trading
By Administrator on Wednesday, July 20th, 2011 | No Comments
http://www.optionsbinary.com/
Options Binary – Binary Options Trading
The simplicity of trading Binary Options •
Binary Options contracts have long been available over the counter and were considered to be an “exotic” instrument, without any liquid market for trading them
In 2007 the OCC (options clearing corporation) has proposed a rule change to allow Binary Options trading followed by the SEC (Securities and Exchange Commission) which approved listing of such instruments in 2008.
In 2008 AMEX (American stock exchange) has launched European, cash-or-nothing, Binary Options options, and CBOE (Chicago board option exchange) followed with its own launch in June 2008.
Binary Options simplify
Binary Options simplify Binary Options Trading •
Binary Options simplify option trading around the globe since it only has to possible outcomes..
If the trader believes that the instrument will close above the current price he chooses a “call option”, on the contrary, if he believes that the instrument will close below the current price he chooses a “put option”. .
If his predictions are correct he will receive the fixed payout rate as stated on the option itself (it usually varies between 60 to 70 percent). .
Yes it’s that simple, so just start trading.
An option is a contract between a buyer and a seller that gives the buyer the right—but not the obligation—to buy or to sell a particular asset (the underlying asset) at a later day at an agreed price.
And so there are two ways of “holding” an option, a call option and a put option.
Call option- allows its buyer the right to buy the underlying asset from the option seller at a given price. .
Put option- allows its buyer the right to sell the underlying asset to the option seller at a given price. .
In return for granting the option, the seller collects a payment (the premium) from the buyer..
By: options247
About the Author:
Options Binary – Binary Options Trading
Trading Options Online.tools For Profits
By Administrator on Sunday, July 17th, 2011 | No Comments
Like penny stocks, options appeal to small investors because the initial cash outlay is smaller than actually having to purchase the assets. It is for this reason that many go swimming in the option pool without first learning how to swim. Before they know it, they are in the deep end, treading water and going under. Many of the online brokers have their new clients show proof of option trading experience before allowing them to trade in options
The popularity of option trading has grown over the past couple of decades, mostly due to everyone having easy access to the internet. Like most things having to do with the market, options began as way that commodities could be assured of a future price. No one knows who came up with the concept, but to hedge their bets options were created. Remember, an option is a contract between a buyer and a seller that gives the buyer the right, BUT NOT THE OBLIGATION to buy or to sell a particular asset (the underlying asset) at a later day at an agreed price. What began more than 150 years ago at the Chicago Board of Trade, Kansas City Board of Trade, the Minneapolis Grain Exchange, and the New York Cotton Exchange, has evolved into the fastest way to make or lose a fortune.
So why, you ask, should someone even consider toying with option trading? The answer is, you shouldn’t. Unless of course you already know a little something about day trading. The modern trader does not hold onto an option very long. In most cases the option gets sold the same day it was acquired. The secrets to finding the right asset to option are twofold. You must look for a stock or commodity that has a lot of movement, up or down doesn’t matter. Second, there must be higher than normal volume. If you are not properly trained or at least have some options market knowledge, you can lose your investment in an instant. I am of course referring to the American market where an option may be exercised on any trading day on or before expiration. A European option may only be exercised on expiration. There are several different styles of options available. This is just one of the many things you must know about to become a successful options trader.
Your Options Are Many
Types of options are
Exchange traded options which are:
1. stock options,
2. commodity options,
3. bond options and other interest rate options
4. stock market index options or, simply, index options and
5. options on futures contracts
And…
Over-the-counter options:
1. interest rate options
2. currency cross rate options, and
3. options on swaps or swaptions.
Knowing what to Trade Is Just the Beginning
The Right Platform Is Your Only Option
This is why you must be knowledgeable and confident before attempting to do even one option transaction. Without correct and through training and the right kind of software to trade on, you can very easily lose your investment. To be affective the platform should meet at least a minimum of three qualifications.
1. It must be able to offer live streaming technical data. (Otherwise the program is merely educational)
2 Visually it has to be large enough for all the data to be seen easily. (Many of the online brokerage’s technical data is too small to be useful)
3. It must be cost effective. (Most good systems can be purchased for between one and two hundred dollars)
I don’t profess to being an expert, but I do know of some. I obviously don’t have the time to go into all the details now, but at my site Market Mentalist you will find all you need to know about investing online. There is an abundance of articles and product information on Trading Options Online…Tools for Profits
There is access to some of the top trading systems available including software, books, newsletters, and Forums. Whether you are an inquisitive novice or a seasoned pro Market Mentalist offers the online investment resource you just might be seeking.
By: Avery Mann
About the Author:
Now in my late 50′s, I consider myself to be a Jack Of All Trades And Master Of a few things. I was a struggling actor for 25 years. During that time I learned a little about a lot of things, and would like to pass along some of that knowledge. As an experienced trader, I can tell you that this the time to take advantage of the market and Trading Options Online…Tools for Profits
