The option trader s guide to probability volatility and timing phần 2 pptx

... received the option premium of $450. Nevertheless, if the stock falls too far, both traders will face the prospect of a large loss and may need to act in order to cut the loss. The bot- tom line is ... implications for each choice? The best way to assess the relative advantages and disadvantages is to examine the risk curves for each potential trade. Figures 2....

Ngày tải lên: 09/08/2014, 16:21

... purchasing a call option has a limited risk because the most you stand to lose is the premium paid for the option plus commissions paid to the broker. 52 THE OPTIONS COURSE ccc_fontanills_ch3_ 42- 75.qxd ... owner. Short Stock Case Study Outside of trading options, there is only one method a trader has to make a profit during a downtrend in stocks: short selling stock....

Ngày tải lên: 09/08/2014, 16:20

... Trade Selection 25 1 Appendix B Option Exchanges, Option Brokers, Option Symbols, and Option Volume 25 5 Exchanges 25 5 Brokerage Firms 25 7 Resources 25 7 Stock and Stock Index Option Symbols 25 8 Stock ... 9 Analyzing Risk: What Separates the Winners from the Losers 11 Summary 18 Chapter 2 The Basics of Options 21 Option Definitions 21 Options on a Specifi...

Ngày tải lên: 09/08/2014, 16:21

... contrast in returns for these two positions at each price level. Whereas the long stock position makes money if the stock rises and loses money if the stock falls, the option position • Makes money ... oppor- tunities to astute traders. Each strategy also entails unique risks, which must be understood and accounted for if you hope to use them successfully. More information o...

Ngày tải lên: 09/08/2014, 16:21

... put spread, 1 92 Butterfly spread, entering, 22 3 23 5 key factors, 22 3 22 9, 22 6 (fig.), 22 7, (fig.), 22 7 (tab.), 22 8 (fig.) position management, 23 3 23 4, 23 3 (tab.), 23 4 (figs.) position taken, 22 9 23 2, ... (tabs.) intrinsic value versus ex- trinsic value, 30– 32, 31 (tab.) option definitions, 21 25 options on specific security, 26 –30, 26 (tab.) call options, 2...

Ngày tải lên: 09/08/2014, 16:20

... rewards. Stories about the large sums of money to be made and the successes of the rich and famous inspire a desire to achieve the same level of financial success. Just as it is a business s objective ... investors a way to buy and sell shares that represent entire baskets of stocks. In the case of Spiders, the basket of stocks represents the companies included withi...

Ngày tải lên: 09/08/2014, 16:20

... sell another call to offset your risk. • The stock falls below the initial stock price but stays above the breakeven: The long stock position starts to lose money, but this loss is offset by the ... in the stock s price is anticipated. 2. Check to see if this stock has liquid options available. 3. Review options premiums with various expiration dates and strike prices. O...

Ngày tải lên: 09/08/2014, 16:20

... making these kinds of assessments, options traders typically refer to the following risk measurements: delta, gamma, theta, and vega. These four elements of options risk are referred to as the option ... important to them than the volatility of the options (implied volatility) and the volatility of the underlying stock (statistical or historical volatility) . Pro...

Ngày tải lên: 09/08/2014, 16:20

... worthless. In that case, the loss is equal to the commissions paid for the trade. On the other hand, if the stock falls sharply, the losses can be substantial. The downside breakeven is equal to: ... strongly that the stock will continue to decrease. • The underlying stock rises between the downside and upside breakevens: You should exit the entire position and...

Ngày tải lên: 09/08/2014, 16:20

... is selecting a stock that has been in the news, whose volatility is high, and for which a type skew exists (a type skew is when a volatility skew exists between the put 29 2 THE OPTIONS COURSE Diagonal ... calls to the upside and the short shares to the downside). Re- member, as long as you use long options—puts or calls—it is a long synthetic straddle. I prefer to...

Ngày tải lên: 09/08/2014, 16:20