profit making techniques for stock stock index and commodity options
Option Strategies Profit Making Techniques for Stock Index and Commodity Options 2nd Edition_2 docx
... after being listed and traded This is very infrequent and happens only in stock options when the stock splits or pays a stock dividend The result is a change in the strike prices and the number of ... ORDERS Option orders are the same as orders for stock indexes, stocks, or futures In general, the accepted orders for options are the same as those accepted for the UI Special considerations about ... buy or sell, abandonment, and exercising Buying and selling, as discussed earlier, are the most common methods of liquidation Abandonment and exercise are discussed here Exercising Options An option...
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Option Strategies Profit Making Techniques for Stock Index and Commodity Options 2nd Edition_3 pptx
... Dividends (for options on stocks and stock indexes) Given this information, the model can be used to find the fair price of the option But suppose the current price of the option was known, and what ... in foreign interest rates This is only used in foreign exchange options It has no impact on any other options Foreign exchange options are affected by phi because options are priced on the forward ... drawbacks As a result, the model is no longer the standard for options on bonds, foreign exchange, and futures, though the standard models for these three items are modifications of the original...
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Option Strategies Profit Making Techniques for Stock Index and Commodity Options 2nd Edition_5 ppt
... divided by the initial investment The formula is: Return = (Profit or loss) ÷ initial investment For example, if you buy an IBM option for and sell it for 71 /2 , for a profit of 21 /2 , your return ... are trading for $4 and the out-of-the-money options are trading for $2 This means that you could have twice as many of the out-of-the-money options as you could of the at-the-money options This ... expected rally and the risk if there is no rally Thus, for an excellent guide to the relative risk and reward of holding various options, take the implied or estimated volatility for each stock, estimate...
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Option Strategies Profit Making Techniques for Stock Index and Commodity Options 2nd Edition_6 potx
... OEX stock index against a portfolio of stocks that mimic the OEX (The OEX is an index composed of 100 large NYSE stocks It is possible to mimic the index by buying all the stocks in that index ... divided by the initial investment The formula is: Return = (Profit or loss) ÷ initial investment For example, if you buy an IBM put option for and sell it for 71 /2 , for a profit of 21 /2 , your return ... are trading for $4 and the out-of-the-money options are trading for $2 This means that you could have twice as many of the out-of-the-money options as you could of the at-the-money options This...
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Option Strategies Profit Making Techniques for Stock Index and Commodity Options 2nd Edition_9 doc
... short puts For example, if you short one UI and two puts, you have, for margin purposes, one covered put write and one naked short put Break-Even Point The formulas for the two break-evens for a ratio ... outof-the-money options is greater than the at-the-money options You can sell the out-of-the-money options and buy the at-the-money options, expecting the volatility skew to go away or to be reduced For ... UI For instance, you sell one S&P 500 futures contract at 225 and sell two 225 put options with deltas of −0.50 each The delta on the short stock index futures is −1.00 so you need to sell options...
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Option Strategies Profit Making Techniques for Stock Index and Commodity Options 2nd Edition_10 docx
... two strike prices, in this case, 645 Table 16.1 shows the profit and loss for each of the two options and the net profit or loss for the total position at different prices of the MMI when it expires ... of the maximum risk and the point where it occurs, 650 Table 16.3 shows the same situation for a bear call spread with the 645 call sold for 103 /4 and the 650 call purchased for 77 /8 TABLE 16.3 ... you could initiate about three bear spreads for less investment than one put Maximum Risk Maximum risk is different for bear call and bear put spreads For a bear put spread, the maximum risk will...
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Profit Making Techniques for Commodity Options 2nd Edition_2 pptx
... OEX stock index against a portfolio of stocks that mimic the OEX (The OEX is an index composed of 100 large NYSE stocks It is possible to mimic the index by buying all the stocks in that index ... divided by the initial investment The formula is: Return = (Profit or loss) ÷ initial investment For example, if you buy an IBM put option for and sell it for 71 /2 , for a profit of 21 /2 , your return ... are trading for $4 and the out-of-the-money options are trading for $2 This means that you could have twice as many of the out-of-the-money options as you could of the at-the-money options This...
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Profit Making Techniques for Commodity Options 2nd Edition_3 pdf
... down and forward—keep some of your original write, and roll down and forward some into the next expiration month Note that rolling down and forward restricts the maximum profit potential for a ... calls For example, if you’re long one UI and short two calls, you have, for margin purposes, one covered call write and one naked short call Break-Even Point The formulas for the two break-evens for ... no financing costs and that you will hold the write for one month Example 10.1 Net investment required–Common Cost of stock + Stock commissions − Options premium received + Options commissions...
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Profit Making Techniques for Commodity Options 2nd Edition_5 pdf
... short puts For example, if you short one UI and two puts, you have, for margin purposes, one covered put write and one naked short put Break-Even Point The formulas for the two break-evens for a ratio ... outof-the-money options is greater than the at-the-money options You can sell the out-of-the-money options and buy the at-the-money options, expecting the volatility skew to go away or to be reduced For ... UI For instance, you sell one S&P 500 futures contract at 225 and sell two 225 put options with deltas of −0.50 each The delta on the short stock index futures is −1.00 so you need to sell options...
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Profit Making Techniques for Commodity Options 2nd Edition_10 potx
... decisions and, 16 Dividends: exercise decisions and, 16 naked call writing and, 116 naked put writing and, 152 option pricing and, 30 option specifications and, 16–17 return-if-exercised and, 34–35 ... 31 FLEX options, 11 Foreign exchange options: interest rates and, 28 Phi and, 48–49 Forward price, 61 Futures contracts, 11, 42, 129, 165 Gamma: defined, 24–25 option strategy description and, 49–53 ... understanding, 59 lognormal distribution and, 64–66 probability distribution and, 64 randomness and, 61, 67 standard deviations and, 60–64 Wasting asset, options as, 26–27 Whalley Model, 41 Zeta,...
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Trading Strategies Profit Making Techniques For Stock_1 docx
... Dividends (for options on stocks and stock indexes) Given this information, the model can be used to find the fair price of the option But suppose the current price of the option was known, and what ... in foreign interest rates This is only used in foreign exchange options It has no impact on any other options Foreign exchange options are affected by phi because options are priced on the forward ... drawbacks As a result, the model is no longer the standard for options on bonds, foreign exchange, and futures, though the standard models for these three items are modifications of the original...
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Trading Strategies Profit Making Techniques For Stock_2 pdf
... plugged in and the formula is solved for the value of the option Here, the situation is reversed—the formula is solved for volatility because the current price is known BELL CURVES AND STANDARD DEVIATIONS ... equally and randomly distributed about the midpoint (the randomness of prices is discussed later) Instead, each instrument has a unique distribution pattern For example, the price of stock index and ... current options price This can be found by plugging the current price of the option into the BlackScholes formula (or whatever model is being used) and solving for volatility Usually, the value for...
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Trading Strategies Profit Making Techniques For Stock_3 pot
... divided by the initial investment The formula is: Return = (Profit or loss) ÷ initial investment For example, if you buy an IBM option for and sell it for 71 /2 , for a profit of 21 /2 , your return ... are trading for $4 and the out-of-the-money options are trading for $2 This means that you could have twice as many of the out-of-the-money options as you could of the at-the-money options This ... expected rally and the risk if there is no rally Thus, for an excellent guide to the relative risk and reward of holding various options, take the implied or estimated volatility for each stock, estimate...
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Trading Strategies Profit Making Techniques For Stock_4 pptx
... OEX stock index against a portfolio of stocks that mimic the OEX (The OEX is an index composed of 100 large NYSE stocks It is possible to mimic the index by buying all the stocks in that index ... divided by the initial investment The formula is: Return = (Profit or loss) ÷ initial investment For example, if you buy an IBM put option for and sell it for 71 /2 , for a profit of 21 /2 , your return ... are trading for $4 and the out-of-the-money options are trading for $2 This means that you could have twice as many of the out-of-the-money options as you could of the at-the-money options This...
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Trading Strategies Profit Making Techniques For Stock_5 pdf
... down and forward—keep some of your original write, and roll down and forward some into the next expiration month Note that rolling down and forward restricts the maximum profit potential for a ... calls For example, if you’re long one UI and short two calls, you have, for margin purposes, one covered call write and one naked short call Break-Even Point The formulas for the two break-evens for ... no financing costs and that you will hold the write for one month Example 10.1 Net investment required–Common Cost of stock + Stock commissions − Options premium received + Options commissions...
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Trading Strategies Profit Making Techniques For Stock_6 docx
... roll up and forward—keep some of your original write and roll up and forward some into the next expiration month Note that rolling up and forward restricts the maximum profit potential for a longer ... transaction costs and carrying costs will vary For example, a covered put program for stock indexes can theoretically have puts written against a portfolio of stocks, against a long put with a higher ... securities that relate to the stock portfolio underlying the stock index option Break-Even Point and Up-Side Protection Covered put writing partially hedges both up and down price moves Figure...
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Trading Strategies Profit Making Techniques For Stock_7 ppt
... short puts For example, if you short one UI and two puts, you have, for margin purposes, one covered put write and one naked short put Break-Even Point The formulas for the two break-evens for a ratio ... outof-the-money options is greater than the at-the-money options You can sell the out-of-the-money options and buy the at-the-money options, expecting the volatility skew to go away or to be reduced For ... UI For instance, you sell one S&P 500 futures contract at 225 and sell two 225 put options with deltas of −0.50 each The delta on the short stock index futures is −1.00 so you need to sell options...
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Trading Strategies Profit Making Techniques For Stock_9 pptx
... Therefore, you must continually adjust the ratio of the long to short options For example, you are long 100 options on the S&P 500 futures contract with a strike of 530 and a delta of 0.69, and ... for prices to remain stable but want to capture the time decay of the nearby option For example, you could sell the United Airlines (UAL) November 60 calls for and buy the February 60 calls for ... using the options on Treasurybond futures using the September and December 960 /32 strikes when the price of the underlying futures contract is 965 /32 These options, being the at-the-money options, ...
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Trading Strategies Profit Making Techniques For Stock_10 pot
... Figures 21.3 and 21.4 for examples of option charts for strangles.) For example, a long straddle would be long the $50 call and long a $50 put A long strangle would be long the $60 call and long ... blending of ratio spreads and calendar spreads It consists of selling nearby options and buying fewer of a farther option For example, you could sell of the July 40 calls and buy of the October ... net credit For example, suppose you initiated a long straddle using options on Textron for December expiration Textron is trading at 593 /4 , so you buy the 60 call and the 60 put for each The...
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Trading Strategies Profit Making Techniques For Stock_12 potx
... decisions and, 16 Dividends: exercise decisions and, 16 naked call writing and, 116 naked put writing and, 152 option pricing and, 30 option specifications and, 16–17 return-if-exercised and, 34–35 ... 31 FLEX options, 11 Foreign exchange options: interest rates and, 28 Phi and, 48–49 Forward price, 61 Futures contracts, 11, 42, 129, 165 Gamma: defined, 24–25 option strategy description and, 49–53 ... understanding, 59 lognormal distribution and, 64–66 probability distribution and, 64 randomness and, 61, 67 standard deviations and, 60–64 Wasting asset, options as, 26–27 Whalley Model, 41 Zeta,...
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