Tài liệu The Options Course Workbook Second Edition ppt

[...]... the price of the assets Go short: To sell securities, options, or futures with the intent to profit from a drop in the price of the assets 8 THE OPTIONS COURSE WORKBOOK Investor: A person whose principal concern in the purchase of a security is the minimizing of long-term risk, compared to the speculator who is prepared to accept calculated risk in the hope of making better-thanaverage profits, or the. .. daily on the evening news While the DJIA has evolved through the years, the information derived from it is essentially the 20 THE OPTIONS COURSE WORKBOOK same It gauges the stock prices of 30 U.S companies and reflects developments within the U.S economy The Dow is a price-weighted index in that the average prices of all 30 components are added together and one final average is computed Though not the best... The value of that unit of ownership is based on a number of factors, including: Answer: The total number of outstanding shares; the value of the equity of the company (what it owns less what it owes); the earnings the company produces now and is expected The Big Picture 17 to produce in the future; and the demand for the shares of the company Discussion: Stock ownership is a way to participate in the. .. comes with the obligation to receive delivery of the commodity, bond, or other instrument by a specific date The sale of a futures contract comes with the obligation to deliver the commodity, bond, or other financial instrument to the buyer by a certain date The purchase of an option provides the right, but not an obligation, to buy (in the case of a call) or sell (for a put) the underlying asset The Big... Futures work just like stocks or call options; we want the underlying to rise when we buy a futures contract Of course, like 22 THE OPTIONS COURSE WORKBOOK the stock market in general, futures will be priced based on the expectations for the commodity If everyone expects it to be a tough winter, then orange futures might drop in value However, if you speculate that the winter won’t be as bad as expected,... and reports value changes to the group as a whole A variety of indexes 24 THE OPTIONS COURSE WORKBOOK are tailored to reflect the performance of many different sectors of the marketplace, such as the S&P 500 ($SPX) or the New York Stock Exchange Composite Index ($NYA) While these indexes are used to gauge trends within the stock market, some indexes are designed to measure the price changes of specific... claim), but the option is there if we do want to use it 25 The is referred to as the price at which the stock or commodity underlying a call or put option can be purchased or sold over the specified period Answer: B—Strike price Discussion: The strike price has a distinct relationship to the price of an option If the strike price is a long ways away from the current value of the security, the premium... where there is more possible reward, there is usually a higher degree of risk Even the most successful options traders often lose money in individual trades However, these traders have learned to limit their risk and have developed a sound plan that allows them to be patient and persistent Options Trading: A Primer 7 MEDIA ASSIGNMENT Learning to use the Internet to further your understanding of the. .. trading options, you need to focus on three important features of options: duration, direction, and magnitude If understood, the interrelation of these three issues can provide the edge needed to win at options trading There are, however, some steppingstones that need to be put in place before jumping headlong into the options game Following the suggestions in this book will enable you to gain the knowledge... of supply and demand is used daily in the stock market When there is an abundance of buyers, this pushes the price higher until the stock price finds an equilibrium point When there are more sellers than buyers, the stock price will fall until equilibrium is found to the downside This is the definition of the free market system and has worked well for centuries The stock market is a great discounter . However, these traders have learned to limit their risk and have developed a sound plan that allows them to be patient and persistent. 6 THE OPTIONS COURSE WORKBOOK ccc_opwkbk_ch1_1-8.qxd. The Options Course Workbook ffirs.qxd 12/27/04 2:58 AM Page i Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the