Options Trading Strategie Indien

. Wie man einen Optionshandel in Indien macht. : 29 2013 Die Aktienhandelslandschaft ist heute sehr anders als vor ein paar Jahren. In diesem Video erklärt unser Experte, wie Sie das ICICIdirect dot com Portal nutzen können, um seine zahlreichen Features zu nutzen und einen Headstart auf den Optionshandel in Indien zu bekommen. Unsere Experten einfache Erläuterung der verschiedenen Features beantwortet Ihre Fragen und befasst sich mit Herausforderungen über den Handel wie: Wie man eine Option handelnWas sind die besten Möglichkeiten, um Optionen Trading Links zu anderen Videos in dieser Tutorial-Serie: 1) Was ist Eigenkapital Der beste Equity-Handel Features und Tipps. Bit. lyVpDZYT 2) Was sind Futures und Optionen Das wesentliche Programm für Einstiegsinvestoren. Bit. lyYheCZN 3) Lernen Sie Futures Handel der intelligente Weg bit. ly14rgxy7 4) Gateway to Stock investing in Indien. Bit. ly14rg5jv 5) Gegenseitige Fondsinvestitionen vereinfacht. Bit. lyXReJsW 6) Indischer Aktienmarkt: Wie finde ich die besten Produkte zu investieren? Bit. lyXgNA3v 7) Online Stock Trading Terminologien leicht gemacht. Bit. lyYhfei7Options Trading Strategy Guide: Die Welt der Optionen Trading-Optionen: Nicht ein Null-Sum-Spiel Mit der möglichen Ausnahme von Futures-Kontrakte ist der Handel kein Nullsummenspiel. Mit anderen Worten, für jeden Gewinner muss es keinen Verlierer geben. Deshalb, weil es so viele verschiedene Kombinationen und Möglichkeiten gibt, dass Optionen gegeneinander abgesichert werden können, ist es nicht sinnvoll, die Gesamtzahlen zu betrachten (z. B. die Anzahl der Optionen, die wertlos auslaufen) und erreichen Schlussfolgerungen darüber, wie viele Menschen Geld verdienen oder verloren haben. Aus Gründen der Einfachheit, nehmen wir den Fall einer Ausbreitung. Die Tatsache, dass eine Person Geld verdient, einen Schmetterling zu kaufen, bedeutet nicht automatisch, dass jemand anderes verloren hat. Stattdessen kann die Person, die den Schmetterling verkauft hat, mit Spreads oder durch den Verkauf einzelner Optionen aus der Position gehandelt werden. Für jede Person, die lange ein Schmetterling ist, rufen Sie verbreiten, setzen sich verbreiten, oder was auch immer, gibt es nicht unbedingt Menschen, die kurz die entsprechende Position sind. Als solche wird sich die Rentabilität ihrer Positionen zwangsläufig unterscheiden. Kennen Sie Ihre Konkurrenz In vieler Hinsicht ist Option Handel ein Spiel der Strategie nicht im Gegensatz zu Wettkampfsport oder Schachturniere. Der Hauptunterschied ist, dass im Handel gibt es mehr Spieler und mehrere Agenden. Um erfolgreich zu sein, ist es wichtig, ein Wissen und eine Wertschätzung für die anderen Spieler zu haben. Im Allgemeinen müssen Sie eine Anerkennung für das Verhalten und die Motivation der verschiedenen Spieler gewinnen. In den Optionsmärkten fallen die Akteure in vier Kategorien: Die Börsen Financial Institution Market Makers Einzelne (Retail) Investoren Was folgt, ist ein kurzer Überblick über jede Gruppe mit Einsichten in ihre Handelsziele und Strategien. Der Austausch ist ein pblace, wo Marktmacher und Händler sammeln, um Aktien, Optionen, Anleihen, Futures und andere Finanzinstrumente zu kaufen und zu verkaufen. Seit 1973, als die Chicago Board Options Exchange erste Handelsoptionen begann, sind eine Reihe weiterer Spieler entstanden. Zuerst hielten die Börsen jeweils getrennte Auflistungen und taten daher nicht die gleichen Verträge. In den letzten Jahren hat sich das geändert. Nun, da BSE und NSE beide diese Börsen führen und die gleichen Verträge handeln, konkurrieren sie miteinander. Dennoch, obwohl ein Bestand an mehreren Börsen notiert werden kann, behandelt ein Tausch im Allgemeinen den Großteil des Volumens. Dies wäre der dominierende Austausch für diese besondere Option. Der Wettbewerb zwischen den Börsen war besonders wertvoll für professionelle Händler, die komplexe Computerprogramme erstellt haben, um Preisdiskrepanzen zwischen den Börsen zu überwachen. Diese Diskrepanzen, wenn auch klein, können außerordentlich rentabel für Händler mit der Fähigkeit und Geschwindigkeit zu nutzen. Mehr als oft nicht, professionelle Händler verwenden einfach mehrere Austausch, um die besten Preise auf ihre Trades zu bekommen. Die Entscheidung zwischen den beiden wäre einfach eine Frage der Wahl der Börse, die den meisten Handel in diesem Vertrag macht. Je mehr Volumen der Austausch tut, desto flüssiger ist der Vertrag. Größere Liquidität erhöht die Wahrscheinlichkeit, dass der Handel zum besten Preis gefüllt wird. Finanzinstitute sind prufessionelle Investment-Management-Unternehmen, die in der Regel in mehrere Hauptkategorien fallen: Investmentfonds, Hedgefonds, Versicherungsgesellschaften, Aktienfonds. In jedem Fall kontrollieren diese Geldmanager große Portfolios von Aktien, Optionen und anderen Finanzinstrumenten. Obwohl sich einzelne Strategien unterscheiden, teilen sich die Institutionen das gleiche Ziel - um den Markt zu übertreffen. In einem sehr realen Sinne hängt ihr Lebensunterhalt von der Leistung ab, weil die Investoren, die einen Fonds ausmachen, eher eine wankelmütige Gruppe sind. Wenn Fonds nicht durchführen, sind die Anleger oft schnell, um Geld auf der Suche nach höheren Renditen zu bewegen. Wenn einzelne Anleger eher Aktieninstrumente im Zusammenhang mit bestimmten Aktien handeln könnten, verwenden Fondsmanager häufig Indexoptionen, um ihre Gesamtportfolios besser zu approximieren. Zum Beispiel wird ein Fonds, der stark in eine breite Palette von Tech-Aktien investiert, NSE Nifty Index-Optionen verwenden und nicht separate Optionen für jede Aktie in ihrem Portfolio. Theoretisch wäre die Performance dieses Index relativ nahe an der Performance einer Teilmenge vergleichbarer High-Tech-Aktien, die der Fondsmanager in seinem Portfolio haben könnte. Market Maker sind die Händler auf dem Boden der Börsen, die Liquidität durch die Bereitstellung von doppelseitigen Märkten schaffen. In jedem Zähler hält die Konkurrenz zwischen den Market Maker die Verbreitung zwischen dem Angebot und dem Angebot relativ eng. Dennoch ist es die Ausbreitung, die die Marktmacher teilweise für das Risiko entschuldigt, beide Seiten eines Handels zu nehmen. Für die Market Maker, die ideale Situation wäre, jeden Handel zu klettern. Mehr als oft nicht, aber Marktmacher profitieren nicht von einem endlosen Fluss von perfekt ausgleichen Trades zu Kopfhaut. Infolgedessen müssen sie andere Wege finden, um zu profitieren. Im Allgemeinen gibt es vier Handelstechniken, die charakterisieren, wie verschiedene Market Maker Handel Optionen. Jede oder alle dieser Techniken können von demselben Market Maker je nach Handelsbedingungen eingesetzt werden. Day Traders Premium Sellers Spread Trader Theoretische Trader Day Trader, auf oder aus dem Trading Screen, neigen dazu, kleine Positionen zu nutzen, um auf Intra-Day-Markt-Bewegung zu profitieren. Da ihr Ziel nicht in der Lage ist, sich für längere Zeiträume zu behaupten, werden die Tageshändler in der Regel keine Optionen mit dem zugrunde liegenden Bestand absichern. Gleichzeitig neigen sie dazu, sich weniger um delta, gamma und andere hochanalytische Aspekte der Optionspreise zu kümmern. Genau wie der Name impliziert, Premium-Verkäufer neigen dazu, ihre Bemühungen konzentrieren, hochpreisige Optionen zu verkaufen und den Vorteil der Zeit Zerfall Faktor durch den Kauf sie später zu einem niedrigeren Preis. Diese Strategie funktioniert gut in der Abwesenheit von großen, unerwarteten Preisschwankungen, kann aber extrem riskant sein, wenn Volatilität klettert. Wie andere Market Maker, Sprecher Händler oft am Ende mit großen Positionen, aber sie bekommen dort durch die Konzentration auf Spreads. Auf diese Weise werden auch die größten Positionen etwas abgesichert. Spread Trader beschäftigen eine Vielzahl von Strategien Kauf bestimmte Optionen und andere verkaufen, um das Risiko auszugleichen. Einige dieser Strategien wie Umkehrungen, Conversions und Boxen werden in erster Linie von Bodenhändlern verwendet, weil sie von kleineren Preisdiskrepanzen profitieren, die oft nur für Sekunden existieren. Allerdings werden ausgebildete Händler Strategien wie Schmetterlinge, Kondoren, Call Spreads und setzen Spreads, die sehr effektiv von einzelnen Investoren verwendet werden können. Durch die leichte Herstellung von zweiseitigen Märkten finden sich die Market Maker oftmals mit umfangreichen Optionen in einer Vielzahl von Monaten und Ausübungspreisen. Dasselbe passiert mit theoretischen Händlern, die komplexe mathematische Modelle verwenden, um Optionen zu verkaufen, die überteuert sind und Optionen kaufen, die relativ zu teuer sind. Von den vier Gruppen sind theoretische Händler oft die analytischsten, da sie ständig ihre Position bewerten, um die Auswirkungen von Änderungen in Preis, Volatilität und Zeit zu bestimmen. Mit zunehmendem Optionsvolumen wird die Rolle der einzelnen Investoren wichtiger, weil sie über 90 des Volumens ausmachen. Das ist besonders beeindruckend, wenn man bedenkt, dass das Optionsvolumen im Februar 2000 56,2 Millionen Kontrakte betrug - eine erstaunliche 85er Zunahme im Februar 1999 Die Psychologie des einzelnen Investors Aus psychologischer Sicht sind einzelne Investoren in einer interessanten Gruppe, weil es wohl so viele Strategien und Ziele gibt Da es Einzelpersonen gibt. Für einige sind Optionen ein Mittel, um zusätzliches Einkommen durch relativ konservative Strategien wie abgedeckte Anrufe zu generieren. Für andere bieten Optionen in Form von Schutz-Puts eine ausgezeichnete Form der Versicherung, um Gewinne zu sperren oder Verluste aus neuen Positionen zu verhindern. Mehr Risikotolerante Personen nutzen Optionen für die Hebelwirkung, die sie bieten. Diese Leute sind bereit, Optionen für große prozentuale Gewinne zu handeln, auch wenn sie wissen, dass ihre gesamte Investition auf der Linie sein kann. In gewisser Weise bedeutet eine Position auf dem Markt automatisch, dass Sie mit unzähligen Investoren aus den oben beschriebenen Kategorien konkurrieren. Während das wahr sein kann, vermeiden Sie direkte Vergleiche, wenn es um Ihre Handelsergebnisse geht. Die einzige Person, mit der du konkurrierst, ist dir selbst. Solange Sie lernen, verbessern und Spaß haben, ist es egal, wie der Rest der Welt tut. WIE GEHEN RISIKO UND GESCHÜTZEN GEWINNEN MIT OPTIONEN Professionelle Händler (in der Branche als Market Maker oder Marktbetreiber bekannt), denken oft, dass für den Anfang Investor, Option Handel muss ähnlich wie ein Puzzle ohne die Hilfe eines Bildes. Sie können das Bild finden, wenn Sie wissen, wo Sie suchen. Blick durch die Augen eines professionellen Marktmachers ist eine der besten Möglichkeiten, um über Handlungsoptionen unter realen Marktbedingungen zu lernen. Diese Erfahrung wird Ihnen helfen zu verstehen, wie real-world Änderungen in Option Preisgestaltung Variablen beeinflussen einen Optionen Wert und die Risiken mit dieser Option verbunden. Darüber hinaus, weil die Market Maker im Wesentlichen verantwortlich für das, was der Optionsmarkt aussieht, müssen Sie mit ihrer Rolle und den Strategien vertraut sein, die sie verwenden, um einen regulären Markt zu regeln und ihren eigenen Gewinn zu sichern. Wir geben einen Überblick über die Praktiken der Market Maker und erforschen ihre Denkweise als Architekten des Optionsgeschäfts. Zuerst werden wir die Logistik der Verantwortlichen eines Market Maker betrachten. Wie reagieren die Market Maker auf Angebot und Nachfrage, um einen liquiden Markt zu sichern Wie beurteilen sie den Wert einer Option auf der Grundlage von Marktbedingungen und Forderungen Im zweiten Teil dieses Kapitels werden wir die gewinnorientierten Ziele eines Market Maker berücksichtigen. Wie funktioniert der Markt wie jedes andere Geschäft Wie funktioniert ein Market Maker Profit Was bedeutet es, eine Position abzusichern und wie funktioniert ein Market Maker Hedging, um das Risiko zu minimieren Wer sind Market Maker Das Image eines elektronischen Trading-Terminals ist nicht vertraut Indische Phantasie, aber viele Leute wissen vielleicht nicht, wer die Spieler hinter dem Bildschirm sind. Market Maker, Broker, Fondsmanager, Einzelhändler und Investoren besetzen Handelsterminals in ganz Indien. Tausende von Handelsterminals über 250 Städte Indiens sind kombiniert, sie repräsentieren den Marktplatz für den Optionshandel. Der Austausch selbst stellt den Standort, die Regulierungsbehörde, die Computertechnologie und die Mitarbeiter zur Verfügung, die zur Unterstützung und Überwachung der Handelsaktivitäten notwendig sind. Market Maker sollen eigentlich den Optionsmarkt machen, während Broker die öffentlichen Aufträge vertreten. Im Allgemeinen könnten Market Maker Märkte in bis zu 30 oder mehr Ausgaben und konkurrieren miteinander gegen Kunden kaufen und verkaufen Bestellungen in diesen Fragen. Market Maker handeln entweder mit ihrem eigenen Kapital oder Handel für eine Firma, die sie mit Kapital versorgt. Die Marktmacheraktivität, die zunehmend durch Computerausführung stattfindet, stellt die zentrale Verarbeitungseinheit der Optionsbranche dar. Wenn wir den Austausch selbst als das Rückgrat der Branche betrachten, stellt die Aktion in den Mumbais Broking Büros die Industrie Gehirn und Industrie, Herz. Sowohl ein Katalysator für den Handel als auch ein Profiteur in seinem eigenen Recht, ist die Marktmacher Rolle in der Branche ist eine genauere Prüfung wert. Einzelunternehmer gegen Marktmacher Die Auswertung von Optionen, die von einzelnen Händlern und Market Maker wert sind, ist die Grundlage des Optionshandels. Trader und Market Maker kaufen und verkaufen die Produkte, die sie als rentabel voraussehen. Aus dieser Perspektive besteht kein Unterschied zwischen einem Market Maker und dem einzelnen Optionshändler. Formaler ist jedoch der Unterschied zwischen Ihnen und dem Market Maker verantwortlich für die Schaffung der Option Industrie, wie wir es kennen. Im Wesentlichen sind Market Maker professionelle, großvolumige Option Trader, deren eigener Handel dient der Öffentlichkeit durch die Schaffung von Liquidität und Tiefe auf dem Markt. Auf einer täglichen Basis machen die Market Maker bis zur Hälfte aller Optionshandelsvolumina aus, und ein Großteil dieser Aktivitäten ist verantwortlich für die Schaffung und Sicherung eines zweiseitigen Marktes, der sich aus den besten Angeboten und Angeboten für öffentliche Kunden zusammensetzt. Die Handelsaktivitäten des Market Maker erfolgen unter den Bedingungen eines Vertragsverhältnisses mit einer Börse. Als Mitglieder der Börse müssen die Market Maker Gebühren und Leasing oder eigenen Sitz auf dem Boden, um zu handeln. Noch wichtiger ist, dass ein Market Maker Beziehung mit dem Austausch erfordert, dass er oder sie alle Fragen, die zugewiesen werden, um seine oder ihre primäre Grube auf der Option Boden. Im Gegenzug ist der Market Maker in der Lage, eine privilegierte Position in der Option Markt zu besetzen - Market Maker sind die Händler in der Option Industrie sind sie in der Lage, den Markt zu schaffen (Bieten und fragen) und dann kaufen auf ihr Angebot und verkaufen auf Ihr Angebot. Der Hauptunterschied zwischen einem Market Maker und Einzelhändlern ist, dass die Marktmacher Position in erster Linie durch Kundenauftragsablauf diktiert wird. Der Market Maker hat nicht den Luxus der Kommissionierung und Auswahl seiner Position. Genau wie die Buchmacher in Las Vegas Casinos, die die Chancen setzen und dann einzelne Better unterbringen, die auswählen, welche Seite der Wette, die sie wollen, ist ein Market Maker Job, einen Markt in den Optionen, ein Angebot und ein Angebot zu liefern, und dann Lassen Sie die Öffentlichkeit entscheiden, ob zu kaufen oder zu verkaufen, um diese Preise, damit die andere Seite der Wette. Als die offizielle Option Händler, sind Market Maker in der Lage, Option Großhandel kaufen und verkaufen sie im Einzelhandel. Das heißt, die beiden Hauptunterschiede zwischen Market Maker und anderen Händlern ist, dass Market Maker häufig verkaufen, bevor sie kaufen, und der Wert ihres Inventars schwankt, wie der Preis der Aktien schwankt. Wie bei allen Kaufleuten, aber eine Vertrautheit mit dem Produkt zahlt sich aus. Die Marktmacher jahrelange Erfahrung mit Marktbedingungen und Handelspraktiken im Allgemeinen - einschließlich einer Reihe von Handelsstrategien - ermöglicht es ihm oder ihm, eine Kante (aber geringfügig) über den Markt zu etablieren. Diese Kante ist die Basis für die Marktmacher potenzielle Reichtum. Intelligente Handelsstile der Marktakteure Während des Handelstages verwenden die Market Maker in der Regel einen von zwei Handelsstilen: Scalping oder Positionshandel. Scalping ist ein einfacher Trading-Stil, dass eine immer abnehmende Anzahl von Händlern verwenden. Position Handel, die in eine Reihe von Unterkategorien aufgeteilt ist, wird von den größten Prozentsatz aller Market Maker verwendet. Wie wir diskutiert haben, werden die meisten Marktmacher-Positionen ihnen durch den Auftrag der öffentlichen Ordnung diktiert. Jeder einzelne Market Maker wird sich akkumulieren und heben diese Reihenfolge fließen anders, in der Regel lieber einen Stil des Handels über einen anderen. Ein Market Maker Trading-Stil könnte mit einem Glauben zu tun, dass ein Stil ist mehr rentabel als ein anderer oder könnte wegen einer Händler allgemeine Persönlichkeit und Wahrnehmung von Risiko. Der Scalper versucht in der Regel, eine Option auf das Angebot zu kaufen und es auf dem Angebot zu verkaufen (oder auf dem Angebot zu verkaufen und das Angebot zu kaufen), um den Unterschied zu erfassen, ohne eine Optionsposition zu schaffen. Skalierer profitieren vom Handel, was als Bid Ask Spread bezeichnet wird, der Unterschied zwischen dem Geldkurs und dem Ask-Preis. Zum Beispiel, wenn der Markt auf dem Nifty Juli 1130 setzt, ist 15 (Bid) - 15,98 (fragen), wird dieser Trader kaufen eine Option Bestellung, die in die Handelsgrube auf dem Gebot zusammen mit dem Rest der Menge kommt. Dieser Trader konzentriert sich nun darauf, diese Sätze für einen Gewinn zu verkaufen, anstatt die Optionen zu sichern und eine Position zu schaffen. Aufgrund des Mangels an Provisionen, die von den Market Maker bezahlt werden, kann dieser Trader das erste 15,20 Bid verkaufen, das in die Handelsmasse eintritt und trotzdem einen Gewinn macht, der in der Finanzindustrie als Kopfhaut bekannt ist. Der Trader hat gerade einen Gewinn gemacht, ohne eine Position zu schaffen. Manchmal ist das Halten und Absichern einer Position unvermeidlich. Dennoch ist diese Art des Handels im Allgemeinen weniger riskant, weil der Händler nur kleine Positionen mit wenig Risiko beibehalten wird. Der Scalper ist weniger häufig in diesen Tagen, weil die Auflistung von Optionen auf mehr als einer Börse (Dual-Auflistung) hat den Wettbewerb erhöht und verringerte die Bidask-Spread. Der Scalper kann nur dann Geld verdienen, wenn Kunden in gleicher Höhe kaufen und verkaufen. Weil Kunden-Order-Flow ist in der Regel einseitig (entweder Kunden sind nur kaufen oder nur verkaufen) die Fähigkeit zur Skalp-Optionen ist selten. Scalpers sind daher in der Regel in Handels-Pits Handel Aktien, die große Option Auftragsablauf gefunden gefunden. Der Scalper ist eine seltene Rasse auf dem Trading-Boden, und das Aufkommen von Dual-Auflistung und konkurrierenden Austausch hat Skalierer eine gefährdete Art gemacht. Der Positionshändler hat in der Regel eine Optionsposition, die erstellt wird, während der öffentliche Auftragsablauf berücksichtigt wird und das daraus resultierende Risiko abgesichert wird. Diese Art von Handel ist riskanter, weil der Marktmacher ein Richtungsrisiko, ein Volatilitätsrisiko oder ein Zinsrisiko annehmen könnte, um nur einige zu nennen. Entsprechend können die Market Maker eine Reihe von Positionen in Bezug auf diese Variablen annehmen. Im Allgemeinen sind die beiden üblichen Arten von Positionshändlern entweder Rückspreizer oder Frontspreader. Im Wesentlichen sind Backspreader Händler, die mehr Optionen als sie verkaufen und kaufen, und haben daher theoretisch großes oder unbegrenztes Gewinnpotential. Zum Beispiel würde eine lange Straddle als Backspread betrachtet werden. In dieser Situation kaufen wir die 50 Level Call und Put (ein ATM Streik wäre delta neutral). Da der zugrunde liegende Vermögenswert im Wert abfällt, erhöht sich der Aufruf im Wert. Damit die Position profitieren kann, muss der Wert der steigenden Option um mehr als den Wert der rückläufigen Option steigen, oder der Trader muss aktiv Aktien gegen die Position handeln, scalping Stock als Deltas ändern. Die Position könnte auch von einer Erhöhung der Volatilität profitieren, die den Wert des Aufrufs erhöhen und setzen würde. Da die Volatilität zunimmt, könnte der Händler die Position für einen Gewinn ausverkaufen oder Optionen (bei der höheren Volatilität) gegen die, die sie besitzt, verkaufen. Die Position hat ein großes oder unbegrenztes Gewinnpotential und ein begrenztes Risiko. Wie wir aus früheren Kapiteln wissen, gibt es eine Vielzahl von Risiken, die mit einem Inventar von Optionen verbunden sind. Im Allgemeinen ist das größte Risiko, das mit einer Backspread verbunden ist, Zeitverfall. Vega ist auch ein wichtiger Faktor. Wenn die Volatilität drastisch abnimmt, könnte ein Backspreader gezwungen sein, seine Position zu weniger als günstigen Preisen zu schließen und kann einen großen Verlust aufrechterhalten. Der Backspreader setzt auf Bewegungen im zugrunde liegenden Vermögenswert oder auf eine Erhöhung der Volatilität. Das Gegenteil eines Backspreaders, der Frontspreader verkauft in der Regel mehr Möglichkeiten, als er oder sie besitzt und hat daher ein begrenztes Gewinnpotential und ein unbegrenztes Risiko. Mit dem vorherigen Beispiel wäre der Frontspreader der Verkäufer der 150 Level Call und setzen, kurz die 150 Level Straddle. In dieser Situation würde der Market Maker von der Position profitieren, wenn der zugrunde liegende Vermögenswert nicht außerhalb der Prämie, die für den Verkauf vor dem Verfall eingegangen ist, verschoben hat. Im Allgemeinen sucht der Frontspreader nach einer Abnahme der Volatilität und einer geringen bis gar keinen Bewegung im zugrunde liegenden Vermögenswert. Die Position könnte auch von einer Abnahme der Volatilität profitieren, die den Wert des Aufrufs verringern und setzen würde. Da die Volatilität abnimmt, könnte der Händler in der Position für einen Gewinn oder Kaufoptionen (bei der niedrigeren Volatilität) gegen die, die er oder sie kurz ist, kaufen. Die Position hat ein begrenztes Gewinnpotential und ein unbegrenztes Risiko. Bei der Betrachtung dieser Arten von Handel, ist es wichtig zu erkennen, dass ein Händler kann die zugrunde liegenden Aktien zu handeln, um entweder zu schaffen oder zu verwalten Risiko. Der Backspreader wird Aktien kaufen, da die Aktie im Wert sinkt und die Aktie als Aktienbestand verkauft und damit die Aktie für einen Gewinn skalpiert. Skalping der zugrunde liegenden Aktien, auch wenn die Aktie in einem Bereich weniger als die Prämie für die Position bezahlt Handel, kann nicht nur für die Position bezahlen, sondern kann einen Gewinn über die ursprüngliche Investition zu schaffen. Backspreader sind in der Lage, dies mit minimalem Risiko zu tun, weil ihre Position positive Gamma (Krümmung) hat. Dies bedeutet, dass, da der zugrunde liegende Vermögenswert im Preis sinkt, die Positionen negative Deltas ansammeln und der Trader gegen diese Deltas kaufen könnte. Da der zugrunde liegende Vermögenswert im Preis zunimmt, wird die Position positive Deltas akkumulieren, und der Trader könnte Aktien verkaufen. Im Allgemeinen wird ein Backspreader kaufen und verkaufen Lager gegen seine oder ihre Delta-Position, um eine positive Kopfhaut zu schaffen. Ebenso kann ein Frontspreader die gleiche Technik verwenden, um das Risiko zu bewältigen und das Gewinnpotenzial der Position zu erhalten. Eine frontseitige Position hat negative Gamma (negative Krümmung). Delta neutral zu bleiben, kann einem Frontspreader helfen, Verluste zu vermeiden. Ein sorgfältiger Frontspreader kann den zugrunde liegenden Vermögenswert entkalken (scalping for a loss) und reduzieren ihre Gewinne nur um eine kleine Marge. Sperrung einer Lücke in der zugrunde liegenden Vermögenswert, disziplinierte Kauf und Verkauf der zugrunde liegenden Vermögenswert kann jeden Verlust auf ein Minimum zu halten. Um Fragen weiter zu komplizieren, könnte ein Backspreader oder Frontspreader eine Position einleiten, die spekulative Merkmale hat. Es folgen zwei Beispiele. Diese Händler setzen eine Position ein, die eine Richtungsbewegung im zugrunde liegenden Vermögenswert über eine andere begünstigt. Dieser Händler spekuliert, dass sich die Aktie entweder nach oben oder unten bewegen wird. Diese Art von Handel kann extrem riskant sein, weil der Händler eine Richtung zu dem Ausschluss des Schutzes des Risikos, das mit der Bewegung auf die andere Seite verbunden ist, begünstigt. Zum Beispiel könnte ein Händler, der glaubt, dass der zugrunde liegende Vermögenswert erheblich verkauft hat, Anrufe kaufen und verkaufen. Beide Transaktionen werden von einem Anstieg des zugrunde liegenden Vermögenswertes profitieren, wenn der zugrunde liegende Vermögenswert weiter nach unten gehen würde, könnte die Position viel Geld verlieren. Volatilitätsträger werden in der Regel eine Annahme über die Richtung der Option Volatilität. Für diese Händler, ob ein Kauf oder Verkauf zu verkaufen oder zu verkaufen, basiert auf einer Bewertung der Option Volatilität. Vorhersage Änderungen in der Volatilität ist in der Regel eine Option Händler größte Herausforderung. Wie bereits erwähnt, ist die Volatilität wichtig, weil es einer der Hauptfaktoren ist, die zur Schätzung eines Optionspreises verwendet werden. Ein Volatilitätsträger wird Optionen kaufen, die unterhalb seiner oder ihrer Volatilitätsannahme festgesetzt werden und Optionen verkaufen, die über der Annahme handeln. Wenn das Portfolio hinsichtlich der Anzahl der gekauften und verkauften Optionen ausgeglichen ist (Optionen mit ähnlichen Merkmalen wie Verfallsdatum und Streik), wird die Position nur wenig vega-Risiko haben. Wenn jedoch der Händler mehr Volatilität verkauft, als er oder sie kauft, oder umgekehrt, könnte die Position viel Geld für eine Volatilitätsbewegung verlieren. WIE MARKTBETREIBER WIRD DIE ÖFFENTLICHKEIT TRÄGEN Im Allgemeinen beginnt der Market Maker seine Beurteilung mit einer Preisformel, um einen theoretischen Wert für eine Option zu generieren und dann einen Markt um diesen Wert zu schaffen. Dieser Prozess beinhaltet die Schaffung eines Angebots unter dem Marktmacher Fair Value und ein Angebot über dem Marktmacher fairen Wert der Option. Denken Sie daran, dass der Market Maker eine rechtliche Verantwortung hat, um einen liquiden Markt durch die Bereitstellung einer Bidrisk-Spread zu gewährleisten. Der Handelspartner kann dann entweder die Optionen auf der Grundlage von Market-Maker-Listen erwerben oder verkaufen, oder er kann mit dem Market Maker für einen Preis verhandeln, der zwischen den gebuchten Bidrisk-Preisen liegt (basierend auf seinen jeweiligen Berechnungen des Optionen-theoretischen Wertes) . In den meisten Fällen ist der Unterschied zwischen Market Maker und einzelnen Investoren Geboten und Angebote sind eine Frage der Pennies (was wir könnten fraktionale Gewinne). Für den Market Maker ist der Schlüssel jedoch Volumen. Wie ein Casino, wird der Market Maker das Risiko zu verwalten, so dass sie im Spiel Zeit nach Zeit bleiben und machen ein Rs.1 hier und ein Rs.5 dort. Diese Gewinne summieren sich. Wie das Casino, wird ein Market Maker Verlust gelegentlich aber durch Risikomanagement er oder sie versucht, im Geschäft zu bleiben, lange genug, um mehr zu gewinnen, als er oder sie verliert. Eine weitere Analogie findet sich in der Beziehung zwischen einem Käufer und Gebrauchtwagenhändler. Ein Autohändler könnte ein Gebot für ein Gebrauchtwagen für einen Betrag machen, der weniger ist als das, was er in der Lage ist, das Auto für den Markt weiter zu verkaufen. Er oder sie kann einen Gewinn machen, indem man das Auto für einen Preis kauft und es für einen größeren Preis verkauft. Bei der Bestimmung der Menge, die er oder sie bereit ist zu zahlen, muss der Händler eine Annahme des zukünftigen Wertes des Autos machen. Wenn er falsch ist, wie viel jemand das Auto kaufen wird, dann wird der Dealer einen Verlust auf die Transaktion nehmen. Wenn richtig, aber der Händler steht für einen Gewinn. Auf der anderen Seite könnte der Besitzer des Autos die Händler ursprüngliches Gebot für das Auto ablehnen und um einen größeren Geldbetrag bitten und damit zwischen den Händlern bidrisk Markt kommen. Wenn der Händler beurteilt, dass der Preis, den der Besitzer für das Auto verlangt, noch einen Gewinn ermöglicht, kann er oder sie das Auto kaufen, unabhängig vom höheren Preis. Ähnlich, wenn ein Market Maker bestimmt, ob er oder sie bezahlen (oder verkaufen) einen Preis über einen anderen, er oder sie bestimmt nicht nur den theoretischen Wert der Option kaufen auch, ob die Option eine spezifische Tanne für Risikomanagement Zwecke ist oder nicht . Möglicherweise gibt es Zeiten, in denen ein Market Maker auf die theoretische Kante oder den Handel für eine negative theoretische Kante für den alleinigen Zweck des Risikomanagements verzichten wird. Bevor wir uns mit der Diskussion über die Handelsmachertätigkeiten im Detail beschäftigen, wollen wir uns nochmals auf die Casino-Analogie beziehen. Das Haus in einem Casino profitiert vor allem von seiner Vertrautheit mit dem Geschäft des Glücksspiels und dem Verhalten der Better. Als Institution profitiert es auch von einem Niveau Kopf und sicherlich von gut (wenn nicht besser) informiert als seine Gönner über die Logistik ihrer Spiele und Strategien für den Gewinn. Ebenso muss ein Market Maker in der Lage sein, in kurzer Zeit zu bemerken, wie man auf vielfältige Marktbedingungen reagieren kann, die so spürbar sein können wie eine Veränderung der Zinssätze oder als immateriell wie eine emotionale Trading-Raserei auf der Grundlage eines News-Berichts. Disziplin, Bildung und Erfahrung sind ein Marktmacher beste Versicherung. Wir erwähnen dies hier, weil Sie als individueller Investor diese Richtlinien nutzen können, um Ihnen zu helfen, mit einem Market Maker klug zu konkurrieren und ein erfolgreicher Optionshändler zu werden. Marktvermarktung Im vorigen Abschnitt haben wir uns konzeptionell angegangen, wie ein Market Maker in Bezug auf den Markt (und insbesondere in Bezug auf Sie, den einzelnen Händler) arbeitet. Ein Marktmacher, die tatsächliche Praktiken sind, werden durch eine Reihe von Unternehmensstrategien diktiert, die jedoch während des gesamten Handelstages eine ständige Aufmerksamkeit erfordern. Wie jeder Unternehmer, muss ein Market Maker Geschäftslogik folgen, und er oder sie muss die klügsten Verwendungen seiner Hauptstadt betrachten. Es gibt eine Reihe von Faktoren, die Sie bei der Beurteilung prüfen sollten, ob ein Optionshandel eine gute oder schlechte Geschäftsentscheidung ist. An der Basis sind die Schritte, die ein Market Maker ausführt, wie folgt: 1. Ermittlung des aktuellen theoretischen Fair Value einer Option. (Wie wir diskutiert haben, kann der Market Maker diese Aufgabe mit einem mathematischen Preismodell durchführen.) 2. Versuch, den zukünftigen Wert einer Option zu bestimmen. Kaufen Sie die Option, wenn Sie denken, dass es im Wert zu erhöhen oder verkaufen die Option, wenn Sie denken, dass es im Wert sinkt. Dies geschieht durch die Beurteilung von Marktfaktoren, die den Wert einer Option beeinflussen können. Diese Faktoren beinhalten. Zinssätze Volatilität Dividenden Kurs des Basiswertes 3. Festlegung, ob das Kapital anderswo ausgegeben werden kann. Zum Beispiel, wenn die Zinsen, die durch den Kauf eines Anrufs gespart wurden (anstelle des endgültigen Kaufs der Aktie) die Dividende übersteigt, die durch den Besitz der Aktie erhalten worden wäre, dann ist es besser, den Anruf zu erwerben. 4. Die Berechnung der langfristigen Aktienzinsen, die für die Anleihegelder gezahlt werden, um die Aktien zu erwerben und zu prüfen, ob das Geld, das für den Erwerb der zugrunde liegenden Aktie verwendet wird, besser in ein verzinsliches Konto investiert wird. Wenn ja, würde der Kauf von Call-Optionen anstelle der Aktie ein besserer Handel 5. Berechnen, ob die Zinsen aus dem Verkauf von Short-Aktien erhalten ist günstiger als der Kauf setzt die zugrunde liegenden Aktien. Ist die Kombination von Besitz von Anrufen und Verkauf der zugrunde liegenden Aktien ein besserer Handel als die endgültige Kauf von puts 6. Prüfung auf Arbitrage Möglichkeiten. Wie der vorangehende Schritt besteht diese Aufgabe darin, festzustellen, ob ein Handel besser ist als ein anderer. Im Abschnitt über Kunststoffe erforschten wir die Möglichkeit, eine Position mit den gleichen Gewinncharakteristiken wie eine andere zu schaffen, indem wir verschiedene Komponenten verwenden. Manchmal wird es kostengünstiger sein, eine Position synthetisch zu setzen. Arbitrage-Händler profitieren von Preisunterschieden zwischen dem gleichen Produkt auf verschiedenen Märkten oder gleichwertigen Produkten auf dem gleichen Markt. Zum Beispiel kann eine Differenz zwischen einer Option und dem tatsächlichen Basiswert für Gewinn ausgeschöpft werden. Die drei Faktoren, um diese Entscheidung zu stützen, sind wie folgt: Die Höhe des zugrunde liegenden Vermögenswertes. Der Zinssatz. Zum Beispiel, wenn Sie eine Call-Option kaufen, sparen Sie die Zinsen auf das Geld, das Sie für den zugrunde liegenden Bestand gezahlt haben müssten. Umgekehrt, wenn Sie ein Put kaufen, verlieren Sie die Short-Aktien Zinsen, die Sie aus dem Verkauf der zugrunde liegenden Aktien erhalten könnte. Die Dividendenquote. Wenn Sie eine Call-Option kaufen, verlieren Sie die Dividenden, die Sie verdient haben, indem sie tatsächlich die Aktie halten. 7. Schließlich die Bestimmung des Risikos im Zusammenhang mit dem Optionshandel. Wie bereits erwähnt, sind alle Faktoren, die zum Preis der Option beitragen, potenzielle Risikofaktoren für eine bestehende Position. Wie wir wissen, ändern sich die Werte einer Option, wenn die Faktoren, die den Preis einer Option bestimmen, sich ändern. Dieses mit diesen Änderungen verbundene Risiko kann durch den direkten Kauf oder Verkauf einer Verrechnungsoption oder des Basiswertes gelindert werden. Dieser Vorgang wird als Absicherung bezeichnet. A market makers complex positioning As we mentioned earlier, the bulk of a market makers trading is not based on market speculation but on the small edge that can be captured within each trade. Because the market maker must trade in such large volumes in order to capitalize on fractional profits, it is imperative that he or she manage the existing risks of a position. For example, in order to retain the edge associated with the trade, he or she might need to add to the position when necessary by buying or selling shares of an underlying asset or by trading additional options. In fact, it is not uncommon that once the trade has been executed, the trader an opposite market position in the underlying security or in any other available options. Over time, a large position consisting of a multitude of option contracts and a position in the underlying stock is established. The market makers job at this point is to continue to trade for theoretical edge while maintaining a hedged position to alleviate risk. In the following section, we will review the basics of risk management in the form of hedging. Although market makers are the masters of hedging, hedged positions are essential for the risk management for all option traders. It will be equally important for you to understand how to use these strategies. THE TRUMP CARD OF MARKET OPERATORS: HEDGING Thus far, we have overviewed the logistics of the market makers business model and have seen how it functions to both serve the trading public and the market maker simultaneously. Now we will consider how market makers work to secure their edge against the ongoing risks presented to their many positions. An investor who chooses to invest in a particular market is exposed to the risks that are inherent in that market. The specific risk is high if the investor concentrates on one security only. The more a portfolio is diversified, the lesser the specific risk. Hedging is the most basic strategy that an investor can use in order to guard against loss. A hedge position is taken with the specific intent of lowering risk. As we have learned, option positions are susceptible to more than just simple directional price risks, and therefore, a trader must be concerned with more than simple delta neutral trading. There is risk associated with each of the variables that determine an options value (from interest rates to time until expiration). In order to minimize the effect of these risks to an options value, a trader will establish a position with offsetting characteristics. Just as you hedge a bet by betting against your original bet too a lesser degree, market makers try to take on complementary positions (in stock or options) with characteristics that can potentially buffer against exposure to loss. A hedge, then, is a position that is established for the sole purpose of protecting an existing position. Determining what risks an option position might be exposed to is one of the first steps towards determining how best to hedge risk. We have learned that six risks are associated with an option position: Directional risk (delta risk) is the risk that an options value will change as the underlying asset changes in value. All other factors aside, as the price of an underlying asset decreases, the value of a call will decrease while the price of the put will increase. Conversely, as the underlying asset increases in value, a call will increases in value as the put decreases in value. Delta risk can easily be offset through the purchase or sale of an option or stock with opposing directional characteristics. Directional hedges are illustrated in Tables 1 and 2. Table 1: Delta Effects When the Underlying Security . Increase in Value Interest rate risk (rho risk) is negligible to most traders. Its impact can be substantial if a position contains a large amount of long or short stock or long-term options. Decreasing the stock position, replacing stock with options is the most efficient way to reduce rho risk. Remember, longer-term options are more interest rate sensitive. Dividend risk can be offset through the purchase or sale of options or the underlying stock. An increase in the dividend will make the call decrease in value because the holder of the call does not receive the dividend. In this situation, it is more advantageous to own the underlying asset over owning the call. Conversely, the put will increase in value when the dividend is increased because the short stock seller must pay the dividend to the lender of the stock, which makes owning the put more desirable than shorting the underlying asset. Table 4 illustrates the effects of changing input variables on an options theoretical value. Varying market conditions As market conditions change the values of. Rise in price of the underlying. Knowing the risks involved with options trading is the first step to successful trading while hedging these risks to create a profitable position is the second step. We have learned that there are different ways to hedge each trade, providing a market maker with the important task of determining the best hedge possible for each trade he or she executes. Determining which hedge is the best is based on knowing not only the risks of the original trade but also the corresponding risk of the hedge. Observing actual positions under a multitude of conditions is by far the best way to learn the complex nuances of options. The next two chapters will guide the reader through the fundamentals of the marketplace and setting up a trading station, giving the investor the ability to begin trading on his or her own. HOW TO SELECT AN OPTIONS BROKER Once youve made the decision to trade online, its important to identify a brokerage firm that will meet, and preferably exceed, your expectations. This is especially true in the options trading arena because there are potentially many more factors involved than in a straightforward stock transaction. With stocks, once you have determined what stock to trade, it really becomes a question of how much to buy or sell and when. With options, the decision is much more complicated because the following factors must be considered: Will you buy (or sell) calls or puts What strike price(s) What month(s) What is your strategy Given this level of complexity, there are a few important issues to consider before you choose an on-line broker: Real Time Option Quotes Whether an online broker provides real time option quotes is, perhaps, the most important consideration for even semi-serious option traders. On-line brokerage firms, especially those that specialize in stocks, are sometimes lacking in this critical area. While they might be able to provide real time quotes on individual options, the option chains (the charts showing the bid-ask, volume, and other critical information for all strike prices and expirations) are often not accurate. With the efficiency of the exchanges and the standardization of the contracts, there is no longer a reason for option traders to pay higher commissions on option trades vs. stock trades its no more difficult to execute an options trade than it is to execute a stock trade. Access to Analytics Advanced analytical tools like implied volatilities and deltas are important to serious option traders. However, most traditional brokers do not provide customers access to this nformation. Instead, their customers are forced to trade in the dark. Choosing an exchange (i. e. BSE or NSE) When options are traded on multiple exchanges, its often possible to get a slightly better price on one of the exchanges. While these discrepancies dont last very long, 0.50 or 0.25 can make a significant difference on a large block of trade. However, brokerage firms that make it difficult to execute basic spread orders are even less likely to offer customers a choice as to where their trades are executed. In fact, many customers probably arent even aware of potential price discrepancies across exchanges. For investors who make larger trades, this can be a significant issue. Before establishing any position its important to establish a few guidelines for yourself: Are you trading with money you can afford to lose Is the position you intend to put on sufficiently small that it wont have a major impact on your portfolio What is your specific objective for this position What is your exit strategy What is your downside risk Are you trading with money you can afford to lose The importance of this cannot be overstressed. If you have already earmarked the money for another use, it is not advisable to invest it in a risky position--even for a short term trade. Every day the market extracts money from people who cant afford to lose it. Sei einer von ihnen. Is the position you intend to put on sufficiently small that it wont have a major impact on your portfolio This is a guideline novice traders routinely violate. Experienced traders caution people against putting on positions that will have devastating results if the market moves the wrong way. Some traders go so far as to say that positions should be so small that putting them on seems almost meaningless. Typically, the percentage of your portfolio associated with this would be 12 to 1. Keep in mind though that this applies to traders more than long-term investors. This is not to say that investors wouldnt benefit from the same advice. They probably would. Its just that a disciplined approach is particularly beneficial to option traders who could easily lose their entire investment. What is your specific objective for this position What is your exit strategy These issues are inter-related so we will examine them together. First, whenever you put on a position, its important to set a price target along with a strategy for what happens when you get there. For example, if you are convinced a particular Internet stock is hugely overvalued (imagine that) and due for a correction, you might decide to buy a long put either at-the-money or slightly out-of-the-money. If the market behaves as you predict and the price drops, you have to decide how far to let your profits run and at what point to take profits. If the stock drops 50 and your put is now deep in-the-money, this might be a good time to take profits. On the other hand, if you think the stock is still overvalued, you could buy a slightly out of the money call and let the put ride. For example, if the stock dropped from 250 to 150 and you own the 240 put, you could lock in your profit by buying a 150 call. This way, if the stock goes back up, what you lose in the put will be made up by the call. If the stock continues to drop as you hope, the put will increase in value and the call will expire worthless. Whatever you decide, its good to have your strategy thought out in advance. This helps to take the emotion out of it. What is your downside risk With option spreads and other advanced strategies, your maximum loss may be more than your initial investment. Before entering into any trade, its important to know your maximum profit, maximum loss, and break-even. Trading surprises are seldom pleasant. Modifying and Managing a Position Depending on market conditions, option investors may need to modify their positions either to lock in profits or protect themselves from adverse moves. Protecting your profits and limiting your losses Taking the easiest example, lets imagine you bought a long call and watched with interest as the stock rallied. How can you protect what is now a paper profit Considering the additional stock commissions involved in exercising the option, well disregard this as a strategy and focus on other alternatives. The dilemma whenever a position makes money is when to take profits and when to let profits ride. By selling the call, you lock in profits, but you may miss additional upside. On the other hand, if you sit tight, the stock could pull back below the strike price. In this case, you would lose your additional investment as well as your paper profit. Fortunately, there are other alternatives. The important point to note is that the riskiest course of action is to do nothing because your initial investment remains at risk along with any paper profits you have generated. SEVEN MYTHS ABOUT STOCK OPTIONS For years, the options market was shrouded in mystery as transactions took place with obscure options dealers who set the prices and terms of options contracts known as Jhota Phatak. The BSE and NSE created listed options that became the standard, and option prices were set in an auction market nearly identical to the stock exchanges. For the first time, this allowed the option holder to choose to sell his contract on the open market before it expired. Trading volume in listed options has exploded in the United States and option trading on more than 1,900 different equities and indices now accounts for the equivalent of 70 million shares of stock trading each day. But many of the myths associated with options have lingered. Unfortunately, these myths have caused many investors to remain on the sidelines while they could be utilizing options profitably or for reducing risk. Myth 1: 90 of Options Expire Worthless This statistic is often bandied about by those who have no experience trading options. According to the CBOE, about 30 of all options expired worthless -- a far cry from 90. Myth 2: Options are Much Riskier Than Stocks or Mutual Funds This assumes that the investor is trading options with the same amount of capital that he would devote to stocks or mutual funds. On a rupee for rupee basis, options are riskier. Here at STOCKWHIZO Research, we never recommend trading options in this manner. Instead we show our subscribers that options are a cheap way to reduce their overall risk. How First, by limiting their total rupee exposure to a fraction of what they would invest in stocks or mutual funds. Second, by diversifying their options portfolio among different underlying equities. And third, by purchasing both call and put options, since put options are profitable when the underlying stock declines in prices. Myth 3: Option Sellers Make Profits at the Expense of Option Buyers Unlike the gambling casino (or the lottery or the race track) which has built-in percentage advantages for the house, option trading is a zero sum game in which option sellers and buyers are always at a standoff in total. Option buying and selling differ only in the distribution of their outcomes, not in their relative profitability. Although option buyers can have more losing than winning trades, they never lose more than their original investment and their profit potential is unlimited. Option sellers profit most of the time but their potential losses are unlimited. STOCKWHIZO has always been dedicated to maximizing profit potential through option buying -- by taking full advantage of the unlimited profit potential and limited risk of this strategy. Myth 4: Options are Too Complicated Nonsense Anyone who is familiar with stocks can easily learn how to trade options. The approach to option trading that we use at STOCKWHIZO is very simple. If we are bullish on a stock, we advise you to buy a call option on that stock. For a fraction of the underlying stock price, you rent any appreciation in the stock above a particular price for a specified time. If we are bearish on a stock, we advise you to buy a put option. Here you rent any decline in the underlying stock below a particular price for a specified time. Its that simple Myth 5: Stockbrokers Dont Understand Options and are not interested in Options Business. While this may have been a problem in the beginning, the brokerage landscape will significantly changed for the better. A number of brokerage firms now specialize exclusively in options. Many large brokers will become option trader friendly. As time passes by with experience. Some traditional full-service firms will developed expertise in options and the desire for options business. While we do not recommend any specific firm, STOCKWHIZO subscribers receive a list of firms that are interested in options business and have the expertise to meet the needs of option traders. Myth 6: You cant Beat the Option Pricing Model. Since options are a zero-sum game, and option prices are based upon a mathematical option pricing model, some say it is impossible to profit from buying options in the long run. WE STRONGLY DISAGREE. First, prices for exchange-listed options are set in the marketplace by buyers and sellers, although the computerized pricing models do exert a strong influence. But more importantly, these models are based upon the mistaken assumption that all stock price movement is random. Clearly, there are always certain stocks that are moving in well-defined price trends, as opposed to moving randomly. If you can identify those stocks whose price trends are likely to continue, you can beat the option pricing model Much of our research has been devoted to developing indicators to determine stocks that will continue moving in such price trends, so our subscribers can profit from buying undervalued options on these stocks. Myth 7: Options Trading Requires Too Much Time Amateurs are rarely successful trading options because they dont have the time, information, expertise or the discipline to compete in this fast-moving market. But STOCKWHIZO subscribers have a big edge over these amateurs. First, our staff of professionals here at STOCKWHIZO Research have the information and expertise to make you a successful options trader. And second, we give you the disciplined trading rules that help you make big money and also minimize your time commitment to your options trading We tell you how much to pay, when, and at what price to sell. And you can often leave these instructions with your broker, so your options portfolio can appreciate on automatic pilot Anyone seriously interested in trading would do well to buy a copy of Jack Schwagers books Market Wizards The New Market Wizards. Through interviews and conversations with Americas top traders, Jack extracts the wisdom that separates successful traders from those who, through their trading, simply add to the wealth of successful traders. Keeping Your Trades Small One of the key factors mentioned by almost every good trader is discipline. Discipline, as you might imagine, takes a variety of forms. For beginning traders, one of the toughest challenges is to keep trades small. Believe it or not, more than a few top traders dont allow any one position to account for more than 1 of their total portfolio. Professionals attribute much of their success to managing risk in this way. Limiting Your Losses Another aspect of trading that involves discipline is limiting your losses. Here, there isnt a magic formula that works for everyone. Instead, you have to determine your own threshold for pain. Whatever you decide, stick to it. One of the biggest mistakes people make is to take a position with the intention that it be a short-term trade. Then, when the position goes against them, they make a seamless and unprofitable transition from trader to long-term investor. More than a few people have gone broke waiting for the trend to reverse so they could get out at break-even. If you are going to trade, you have to be willing to accept losses--and keep them limited Letting Your Profits Run Another mistake novice traders make is getting out of profitable positions too quickly. If the position is going well, it isnt healthy to worry about giving it all back. If thats a concern, you might want to liquidate part of the position or use options to lock in your profit. Then, let the rest of it ride. It isnt uncommon for people to view trading as a fast-paced, exciting endeavor. Fast-paced Absolutely. Exciting Now thats a matter of opinion. The Importance of Remaining Cool-Tempered More than a few traders interviewed in The New Market Wizards emphasize the importance of remaining unemotional and cool-tempered. To these people, trading is a game of strategy that has nothing to do with emotion. Emotion, for these traders, would only cloud their judgment. In the book Jack talks about one trader who was extremely emotional. Although Jack was able to show him how to be less emotional and more detached, it became quickly apparent didnt enjoy being emotionally unattached. He found it boring. Unfortunately, emotion involvement in trading comes at a high price. Before too long, that trader went broke. The morale of the story is simple: If you insist on being emotionally attached to your trading, be prepared to be physically detached from your money. Acceptance and Responsibility One of the biggest mistakes traders can make is to agonize over mistakes. To beat yourself up for something you wish you hadnt done is truly counterproductive in the long run. Accept what happens, learn from it and move on. For the same reason, its absolutely crucial to take responsibility for your trades and your mistakes. If you listen to someone elses advice, remember that you, and you alone, are responsible if you act on the advice. Another Way to View Losses Perhaps the most striking example of emotional distance in trading is a reaction to positions that go against thinking to yourself, Hmmm, look at that. If only we could all be that calm Of all the emotions we could possibly experience, fear and greed are possibly the two most damaging. Of all the emotions that can negatively impact your trading, fear may be the worst. According to many of the traders interviewed in The New Market Wizards, trading with scared money is an absolute recipe for disaster. If you live with the constant fear that the position will go against you, you are committing a cardinal sin of trading. Before long, fear will paralyze your every move. Trading opportunities will be lost and losses will mount. To help deal with your fear, keep in mind what fear is False Evidence Appearing Real The flip side of fear is confidence. This is a quality that all great traders have in abundance. Great traders dont worry about their positions or dwell on short-term losses because they know they will win over the long term. They dont just think theyll win. And they dont just believe theyll win. They KNOW theyll win. It should never bother to lose, because one should always believe that one would make it right back. Thats what it takes. To Talk or Not to Talk For many traders, sharing opinions and taking a particular stance only magnifies the stress. As a result, they begin to fear being wrong as much as they fear losing money. Although it may be one of the hardest lessons to learn, the ability to change your opinion without changing your opinion of yourself is an especially valuable skill to acquire. If thats too hard to do, the alternative may prove much easier: Dont talk about your trades. Greed is a particularly ugly word in trading because it is the root cause of more than a few problems. Its greed that often leads traders to take on positions that are too large or too risky. Its greed that causes people to watch once profitable positions get wiped out because they never locked in profits and instead watched the market take it all back. Part of the remedy for greed is to have, and stick to, a trading plan. If you faithfully set and adjust stop points, you can automate your trading to take the emotion out of the game. For example, lets say you are long the 150 calls in a stock that rises more rapidly than you ever expected. With the stock at 240, the dilemma is fairly obvious. If you sell the calls, you lock in the profit but you eliminate any additional upside potential. Rather than sell the calls, you might buy an equal number of 230 puts. The Rs.90 profit per call that you just locked in will more than offset the cost of the puts. At the same time, youve left yourself open to additional upside profit. Gradual Entry and Exit Another strategy successful traders use is to gradually get in and out of positions. In other words, rather than putting on a large trade all at once, buy a few contracts and see how the position behaves. When its time to get out, you can use the same strategy. Psychologically, the problem people have implementing this strategy is that it takes away the right and wrong of the decision making process. Its impossible to be completely right or completely wrong using this strategy because, by definition, some of the trades will be put on at a better price than others. Awareness and Instincts For professional traders especially, instincts often play a crucial role in trading. To truly appreciate this, just close your eyes and imagine making trades in a fast market with dozens if not hundreds of people screaming around you. In this environment, it becomes absolutely essential to maintain a high level of awareness about everything going on around you. Then, to have the confidence to pull the trigger when necessary, you have to trust your instincts. Its absolutely amazing to see how some professional traders, even in a busy market, know exactly who is making what trades. For these traders, expanded awareness is often a necessary prerequisite to fully developing and trusting their instincts. The same is true for professional traders as well. Watching how markets behave and developing a feel for the price fluctuations is truly time well spent. Unfortunately, in this era of technology, people have become so removed from their natural instincts that many are no longer in touch with their intuition. This is unfortunate because intuition functions as a wonderful inner guidance system for those who know how to use it. One trader interviewed by Jack Schwager in The New Market Wizards relies so heavily on his intuition that he didnt want his name in the book for fear his clients would be uncomfortable with his strategy and move their money elsewhere. Speaking anonymously, he described in detail how he establishes a rhythm and gets in sync with the markets. In this way, he has learned to distinguish between what he wants to happen and what he knows will happen. In his opinion, the intuition knows what will happen. With this knowing, the ideal trade is effortless. If it doesnt feel right, he doesnt do it. When he doesnt feel in sync with the markets, this trader will paper trade until he feels back in rhythm. But even here, he keeps his ego and emotion out of it. His definition of out of sync is completely quantifiable. Being wrong three times in a row is out of sync. Three mistakes and its back to the paper trading. Now theres a strategy almost everyone can benefit from. Trading is a performance-oriented discipline and every great athlete, trader, or Performer will occasionally hit performance blocks. Every Olympic contender trained hard physically, but the difference between the ones who made the Olympic team and those who did not was the emphasis put on mental coaching by the winners. Much of a traders early education is concentrated on strategies and market analysis. But what are the necessary ingredients for peak performance What are the tools for both mastering the mental side of the game and busting out of the inevitable slumps that can occur along the way First - what is the mindset necessary for peak performance How does one ultimately get in the groove There is no better feeling than being in the flow - especially with trading. That is what many of us live for and what keeps us in the game, because trading can be a very tough business with long hours. There are several key common ingredients when you are performing your best, no matter what the field. EXPECT success. It begins initially with your self-talk. Do you get down on yourself when you make a mistake - or do you say to yourself - next time I will do better because I have great trade management and am a superior trader Be your own best motivator and believer in yourself. Positive Self Talk leads to positive BELIEFS. If you believe you can do something, you WILL eventually find a way. When you have a positive belief system that the eventual outcome will be OK, then you are more mentally and physically relaxed. You then have better concentration, which leads to smoother execution, which of course leads to peak performance. Now, on the flip side of the coin, negative self-talk sows seeds of doubt. This lowers self-confidence, which leads to a negative belief system. This then creates anxiety, which leads to disrupted concentration. Now the trader becomes tense and tentative which in turn leads to poor performance. Talk about a vicious cycle SECRETS OF TOP TRADING PERFORMANCE KEY INGREDIENTS TO PERFORMING YOUR BEST You must be passionate about what you are doing and having fun. Passion first, then performance. Top performance comes from having a high degree of confidence. You must have the confidence that you can take control and face adversity. You must also be confident that you will have a favorable outcome over time. Peak performance comes from exceptional CONCENTRATION. You must concentrate on the process, though, not the outcome. A sprinter who is in the lead is thinking about the wind on their face, how relaxed their arms are, feeling the perfect stridethey are totally in the moment. The person who does NOT have the edge is thinking, Oh, that runner is pulling ahead of meI dont know if I have enough wind to catch the leader They are tense and tight because they are thinking about the outcome, not the process. Great performances come from being able to rebound quickly and forget about mistakes. Great performance comes from pushing yourself and trying to overcome limitations. Staying in the safe zone becomes a monkey on your back. Challenge yourself to take that hard trade. Manage it. If it does not work out, so whatyour risk was limited and you can pat yourself on the back for taking the hard trade in the first place. SEE AND DO. DONT THINK Great performance comes from turning off the brain and becoming automatic. This is being in the Zone in the groove. You cant overanalyze the markets during the trading day. When you are relaxed, your reflexes and timing are superior because you are loose. POSITIVE SELF TALK There are some concrete tools to break the cycle and bust out of the slump The number one tool for starters is POSITIVE SELF TALK. We all talk to ourselves in our own head. Be aware of the things you are saying to yourself. The written word is also a powerful tool. Read affirmations and books on positive thinking. Norman Vincent Peale, Napoleon Hill. Arnold Schwarzenaggers autobiography are a few. Richard Marcinko wrote a book called the Rogue Warrior. He talked about the Will to WIN and the belief that ANY circumstances could be overcome. This is a great inspirational book for traders. Next - act like you are already where you want to be. Assume the mannerisms, posture and talk of a top trader. In addition to self-talk and reading written words, develop mental pictures. Visualize what you are going to do with your wealth or how it is that you want to live. Think of the power that money would give you to start any organization you want or to make other peoples lives better. Visualize your dream house. Program your subconscious as though you are already there. Dare to dream. OK - talk, words and pictureswhat is next Look at your environment that you have surrounded yourself with. Your success in trading will also be a product of your environment and I am not just talking about office space. Look at the people you surround yourself with. Do they support your activities Surround yourself with people who believe in you, who smile, and who are enthusiastic in anything they try or do. The top Olympic athletes had friends and family cheering them on every step of the way. BE PREPARED FOR A SURPRISE EVERYDAY All of the above factors deal with external factors and internal belief systems. Now lets get down to the DOING part Every trader should be prepared before the markets open because they already did their homework - right. One of the most impressive points in the Rogue Warrior book was this veteran navy seals obsession for being totally prepared for Mr. Murphy There was always a backup plan for everything and this is what kept him alive. Prepare your daily game plan by looking for both new setups and preparing strategies for managing existing positions. So, assuming that you have done your daily homework as a trader, the next step is to learn how to get into the groove. There is no better tool for this than having routines and rituals. Pre-market rituals help calm the nerves, get you into a rhythm, and also help to turn off the logical part of your brain - the part that wants to overanalyze everything. If you have a chattering monkey sitting behind your ear, routines and rituals are one of the best things to shut that monkey up. Maybe there is an opening sequence of tasks you do before the market opens. Perhaps in the middle of the day you draw swing charts or take periodic readings of the markets action. Maybe you keep a journal and make notes to yourself. At the end of the day, what type of record keeping do you do for your trading activity What do you do to unwind Salesmen are taught to do small rituals before cold calling clients. It controls the anxieties and fears of rejection. Cricket opening Batsmen have a pre-warm up ritual. It calms their minds and puts their body on the autopilot mode. It keeps them involved in the PROCESS and not thinking about the outcome. One of the more common rituals on the trading floors was to wear the same disgusting lucky tie every day. If the mind BELIEVED that the tie was lucky, this was all the traders needed to keep the long term odds in their favor. Here is another helpful factor: A healthy body keeps a healthy mind. EXERCISE This gets oxygen to the brain and keeps the blood flowing. How can you expect to be a peak performer when you are eating junk food and going through insulin swings Or perhaps you drank too much wine the night before or are jittery from drinking too much coffee. How can you concentrate well if you are not getting a full decent nights sleep Sure, most of these are minor factors but they can all add up to major bumps in your performance. One moment of sloppiness can lead to forgetting to place stops or letting a bad trade go too long. Then when damage is done, your confidence gets chipped away. You must treat your confidence level as something to be protected. Good habits will keep your confidence level high. Once you have good habits, it will allow you to increase your trading size. If you want to push yourself to the next level in your trading and are wondering how to increase your size, you MUST have a foundation of good habits. If you are running into a mental block in this area, it is your subconsciouss way of telling you that either you have not done adequate preparation or you are not satisfied with your money management habits. There is one more extremely important thing that contributes to your success and that is GOAL SETTING. When you set your goals, they must be concrete and measurable. You must also break them down into bite size pieces. Perhaps your larger goal is to make 8 digits over the next three years, but how do you get there Put together a more detailed business plan that is NOT Rupee oriented but will help you eventually reach your Rupee-oriented goal. Maybe it includes how many trades you should make per week, how much time you should devote each evening to preparation and studying charts, and plans for controlling risk. Both short term and long term goals help achieve peak performance. You must also have concrete ways to measure those goals. Top cricketers know the splits that they run. They know if they are ON or OFF according to how practice goes. They know their unforced error percentage, their personal best, and their competitions stats. The same should apply to you in your trading. Know your weekly winloss ratios, your trade frequency, and the average amount of profit or loss each month. Only by having something to measure can you tell if you are improving or not and moving closer to your goal The battleground isnt the markets but whats within you. The more you talk with other traders, the more you realize that everyone goes through various common experiences. Everyone makes many of the same classic mistakes. But what distinguishes the ones who can ultimately overcome them Remember that ATTITUDE is everything. How you frame out an individual experience or event will affect your success in the long run. Do you see a trading loss or bad drawdown period as a major setback, or do you see it as a learning experience from which you can figure out how to be on the RIGHT side of a trade instead of the wrong side the next time around. Many great traders use periods after drawdowns to go back to the drawing board. Some of the best systems and trading ideas have come after periods of adversity. What incentive is there to learn and improve ourselves when everything is smooth sailing and we are fat and happy But when times are tough, that is when we can rise to the occasion and prove that we can overcome any obstacle set down in our path. So many great athletes have been able to come from behind when they are down because they have learned how to seize that one opening or opportunity and CONVERT. They latch on to the tiniest shift in momentum and milk it for all it is worth. Latch on to that next winning trade and convert. The first small moral victory is the first step towards reaching the top of Mt. Everest. And if you keep making small steady steps, you will eventually reach the top. Sometimes for a trader, the greatest feeling in the world can be making back those losses, no matter how long it takes, because once you have done that, you realize you can do anything. The most successful players are the ones who have a burning desire to win Dont check out of the game. Never give up Improve your consistency. Stay active, stay involved, and keep your feet moving. Be patient. Do not force a trade that isnt there. Wait for the play to set up. When you get a good trade, go for it. Manage it. Trail a stop. Dont be too eager to get out. Be flexible - if what you are doing isnt working, change what you are doing When down, get a little rhythm and confidence going. Dont worry about being too ambitious. Stay with your game. Dont let outside distractions bother you. They take energy and break your concentration. Match your particular strengths to the type of market conditions. Hate making stupid mistakes and unforced errors. This includes not getting out of a bad trade when you know you are wrong. Many players will play their best game when they are coming from behind. Copyright 2001 by Hiten Jhaveri, StockWhizo Investments. All rights reserved worldwide. Option Strategies Generally, an Option Strategy involves the simultaneous purchase andor sale of different option contracts, also known as an Option Combination. I say generally because there are such a wide variety of option strategies that use multiple legs as their structure, however, even a one legged Long Call Option can be viewed as an option strategy. Under the Options101 link, you may have noticed that the option examples provided have only looked at taking one option trade at a time. That is, if a trader thought that Coca Colas share price was going to increase over the next month a simple way to profit from this move while limiting hisher risk is to buy a call option. Of course, she could also sell a put option. But what if she bought a call and a put option at the same strike price in the same expiry month How could a trader profit from such a scenario Lets take a look at this option combination In this example, imagine you bought (long) 1 65 July call option and also bought 1 65 July put option. With the underlying trading at 65, the call costs you 2.88 and the put costs 2.88 also. Now, when youre the option buyer (or going long) you cant lose more than your initial investment. So, youve outlaid a total of 5.76, which is youre maximum loss if all else goes wrong. But what happens if the market rallies The put option becomes less valuable as the market trades higher because you bought an option that gives you the right to sell the asset - meaning for a long put you want the market to go down. You can look at a long put diagram here. However, the call option becomes infinitely valuable as the market trades higher. So, after you break away from your break even point your position has unlimited profit potential. The same situation occurs if the market sells off. The call becomes worthless as trades below 67.88 (strike of 65 minus what you paid for it - 2.88), however, the put option becomes increasingly profitable. If the market trades down 10, and at expiry, closes at 58.50, then your option position is worth 0.74. You lose the total value of the call, which cost 2.88, however, the put option has expired in the money and is worth 6.5. Subtract from this to total amount paid for the position, 5.76 and now the position is worth 0.74. This means that you will exercise your right and take possession of the underlying asset at the strike price. This means that you will effectively be short the underlying shares at 65. With the current price in the market trading at 58.50, you can buy back the shares and make an instant 6.50 per share for a total net profit of 0.74 per share. That might not sound like much, but consider what your return on investment is. You outlaid a total 5.76 and made 0.74 in a two month period. Thats a 12.85 return in a two month period with a known maximum risk and unlimited profit potential. This is just one example of an option combination. There are many different ways that you can combine option contracts together, and also with the underlying asset, to customize your riskreward profile. Youve probably realized by now that buying and selling options requires more than just a view on the market direction of the underlying asset. You also need to understand and make a decision on what you think will happen to the underlying assets volatility. Or more importantly, what will happen to the implied volatility of the options themselves. If the market price of an option contract implies that it is 50 more expensive than the historical prices for the same characteristics, then you may decide against buying into this option and hence make a move to sell it instead. But how can you tell if an options implied volatility is historically high Well, the only tool that I know of that does this well is the Volcone Analyzer. It analyzes any option contract and compares it against the historical averages, while providing a graphical representation of the price movements through time - know as the Volatility Cone. A great tool to use for price comparisons. Anyway, for further ideas on option combinations, take a look at the list to the left and see what strategy is right for you. Comments (103) Peter December 6th, 2016 at 7:19pm Yes, it represents your PampL movements today when the stock price changes by the amount on the x-axis. Luciano December 6th, 2016 at 7:22am Thanks for your help. So does the pink line represent the PL of my position today I mean the PL that I should have if I close the strategy today Thank you and regards. Peter December 1st, 2016 at 5:15pm The pink line represents the change in the value of the position relative to the current theoretical price. At the center of the graph the pink line will always be zero because if you boughtsold the spread now at the current market price you will not have made or lost anything. But if the market price moves, which is represented by the x-axis your estimated (theoretical) PampL will change by the amount illustrated by the pink line - all other things being equal. As the expiration date approaches, the pink line moves closer to the bluepayoff line. This line, at the expiration date, will be the most you can gain or lose for each corresponding x-axis (stock price) point. Hope this is clear, please let me know if not. Luciano December 1st, 2016 at 8:48am could you please explain me what is the pink line in your graph (PampL60 days) and in the Option Trading Workbook spreadsheet (which is called: Current Theoretical PampL Relative to Underlying Price Changes) You did a great job for newbies like me Thank you. Peter November 18th, 2015 at 3:59pm Hi Renee, yes they are already added as either long or short i. e. Long Straddle and Long Strangle . Renee November 17th, 2015 at 8:55pm Could add Strangle or Straddle Igwe Zachary Githaiga March 30th, 2014 at 3:35am so, what are the strategies in option trading bee February 25th, 2014 at 4:05pm If I039ve actually short a stock and it now is trading higher, is there any option repair strategy I can use to limit my loss Most option repair strategy only gives example starting out with a long position on a stock. Peter December 3rd, 2013 at 2:52am Aplogogies for the delayed response The ATM point will be at the quotforwardquot price, which will be slightly higher than the stock price depending on the interest rate. If interest rates are zero then the ATM price will be the stock price. I039m not really sure what the best volatility to use actually is. Some prefer to stick to a one year rate while others will use an historical level appropriate for the expiration of the options. What is the website you039re looking at for the vols Terry B November 25th, 2013 at 5:21pm Hello, just downloaded your spreadhseet. Awesome stuff. I039m, mainly interested in the deltas for my particular use. a) For the default model stock price of 25. I noticed that the at the money calls were at .52 and the at the money puts were at -.48 Shouldn039t the. calls be at .50 and the puts at -.50 Also, I came across a site that post039s historical volatilities for a stock. 1mo, 2 mo, 3mo, 6mo, 1yr, 2 yr, and 3yr. Which would be the best to plug in to your spreadsheet to calculate most accurate delta039s. The shortest term 1mo thanks. great spreadsheet Jayant October 15th, 2013 at 12:23am Dear admin can u suggest me any new strategy except these strategies..i want some new strategy, m well known all this strategies because m the trainer of options market in kolkata and m also certified with NSE. Peter August 26th, 2013 at 6:18pm It is the theoretical PampL calculated with 60 days left to maturity. Steve August 26th, 2013 at 7:33am What exactly is the pink line in the diagrams It appears to be some average over time but I can039t find a definition anywhere. alvaro frances April 15th, 2012 at 5:03pm Amit Bhutani hello, please can you explain the strategies that spelling on March 17, 2012 the day that I describe below, thanks 1)Long Combo Nifty Short 2) Combo corto largo Nifty 2)Short Combo Nifty Long 3) Put Call Ratio spreed 3)Put Call Ratio spreed 4) Coloque el oso spreed Spreed Bull de llamadas. 4)Put bear spreed Call Bull Spreed. Peter March 27th, 2012 at 5:05pm Right - the OptionTradingWork book is currently onlt Black and Scholes. For American options you can use the Binomial Model - there is a spreadsheet on the Binomial page. James March 27th, 2012 at 7:02am Hi I039ve used the Option Trading Workbook. xls and compared it to bloomberg valuations and it is slightly out. Specifically I039m talking about american options on the ES mini contract, eg ESU2C 1350 Index Does this pricer work for american options, or is it just for european Any chance we get an american options enabled one :-))))) Peter March 26th, 2012 at 7:47pm You can write a callput on the basis of a) creating a naked position because you are bullishbearish on the underlying b) as part of a combination such as a covered call, which is used primarily to gain additional income on an existing stock position. Amit S Bhuptani March 17th, 2012 at 1:12pm Best strategy which I have come across. 1)Long Combo Nifty Short 2)Short Combo Nifty Long 3)Put Call Ratio spreed 4)Put bear spreed Call Bull Spreed. Regards Amit S Bhuptani. PMS ICICI Sec Ltd. Rakesh March 17th, 2012 at 10:38am I wanted to know the basics which I need to keep in mind before trading in quotEXPIRYquot When we need to write a CALLPUT Peter February 26th, 2012 at 4:44pm Mmm, that039s a tough question to answer here Rakesh -) I039d say your best bet would be to invest in a program like MultiCharts . MultiCharts can chart, scan and auto-trade stocks through many different brokers. Plus, it provides an easy to use scripting language that allows you to design and backtest trading ideas before risking real money. I have it and love it Rakesh February 26th, 2012 at 11:36am What things I need to keep in mind before getting into intraday trading in STOCKS I also wanted to know the procedure of picking the right stock in intraday trading Peter February 23rd, 2012 at 5:17pm It depends on what you define as the ATM strike. If you simply say that ATM strike is the strike closest to the stock price, then yes the call will normally have a higher premium than the put. However, the ATM strike should really be driven by the quotforward pricequot of the stock. As option contracts carry the right to exercise at a point in the future, their value is first based on the future price of the stock, which is the stock price plus the cost to hold the stock (cost of carry or interest rates) less any dividends received during that period. As you apply the interest rates and dividends to the current stock price you will calculate a price different to the stock and this is the true ATM price. For retail traders who are simply eye balling the option screen to see where the ATM is, just using the stock price is good enough, which is why they039ve noticed that the call premiums are higher than the puts as the true forward price is actually higher than the stock price. Call, put and stock prices for the same strike are all related and cannot violate put call parity. Take a look at that link to read more and let me know if I039ve missed anything or if you have any questions. Joel H. February 23rd, 2012 at 8:58am I just finished reading a book on options and one of the discussion points was that an ATM call will always have a higher premium than a put at the same strike. If I find a put which has a higher premium then a call at the same strike price, is this unusual Is there a way to take advantage of such a situation Is it fair to assume that this is a temporary situation Thanks in advance. Peter February 23rd, 2012 at 2:28am If the option is out-of-the-money then, yes, it will begin to lose value very quickly as expiration approaches. If you are happy with any profit you039ve made already then you should exit while you can. Ash February 23rd, 2012 at 1:39am Hi Peter, I have a question on when to close out my position on a call option. I currently have a April call option and i wanted to know if there are any best practices around when to closeout your position if you are not planning on purchasing the stock at expiry. I am asking this because as time goes by the price of options go down. It is end of feb now and my options expire in Apr. Your input is appreciated. Peter February 19th, 2012 at 5:04pm If you want limited risk and unlimited profit potential then you are best looking at positions like long call. long put. long straddle. long strangle etc - these are strategies where you are net long options. Rakesh February 19th, 2012 at 8:59am Can anybody tell me the statergies that I need to keep in mind before trading in quotOptionsquot So that the risk percentage is nominal and the probality of profit is high. Peter February 12th, 2012 at 5:09pm This strategy is called a short guts and is similar to a short strangle except you are shorting a put with a higher strike price, where a strangle sells the put with a lower strike price. The payoff calculation is a little different also: with a short strangle the max profit achievable is the premium received. But with a short guts the max profit is the net premium received minus the difference between the two strikes, so in this case 5 (multiplied by whatever multiplier the index carries). Can I ask why would choose this approach instead of selling the 1100 call and the 1050 put Peter February 12th, 2012 at 3:48pm Do you mean selling a call and a put together at the same 130 strike price i. e. a short straddle If so, and the combined premium for this trade was 10, with the underlying now at 150, then Net premium received: 10 Short Put: worthless Short Call: -2,000 Total: -1,990 With the stock at 150 you039ll be assigned the stock at a price of 130 meaning an immediate loss of 20, which multiplied by the multiplier of 100 leaves you with a 2,000 loss for that leg of the position. Take away the premium already received and you039re left with -1,990. eh February 11th, 2012 at 3:48am Short 1 lot, Strike Price 1050, Index CALL at 25 and Short 1 lot, Strike Price 1100, Index PUT at 30 What is the risk in this strategy Position held till expiry amp automatically settled by exchange at iNDEX spot price on expiry day. Varun February 10th, 2012 at 1:22am I am new to this and this site has been a big help , I wanted to clarify one thing . Considering that i am bullish on the market and would like to take a profit from it I sell a put call of a stock X with a strike price of 100 the stock is trading at 130 and i assume it will end close to 150 I will sell this Put call Strike price Premium Expected Price at expiry so the person to whom i am selling would not be excecising his option and i would be able to make money. Please do clarify whether this is possible or not danielyee December 22nd, 2011 at 7:08am If I buy a call e. g price 50 if the market start at 9.30 then suddenly drop is this mean all my money gone Peter December 21st, 2011 at 3:52pm You should be able to see the last price - even if the market is closed. danielyee December 21st, 2011 at 4:38am Thanks and when I click e. g AAPL per contract value NA Does this mean I need to wait until market open to see the price Peter December 20th, 2011 at 5:05pm You can take a look at the option prices on Yahoo . danielyee December 20th, 2011 at 5:15am Im a new guy here. can you teach me where I can see if I want to buy e. g AAPL option trading per contract how much Thanks. Peter December 18th, 2011 at 3:52pm Jorge December 16th, 2011 at 4:35pm What if I sell 5000K put on the day of expiration of the contract and the stock does not move significantly in value to exercise the contract for who ever bought it. Do I get to keep the commission Peter September 29th, 2011 at 12:15am You won039t be able to roll over at the same price - if you want to keep a position in the same strike price, you will have to sell (buy) out of the front month contract and buy (sell) into the back month at the current market prices. Ankur September 29th, 2011 at 12:00am Thanks Peter. Further, if I need to rollover my position to next month, then do I need to pay some extra premium or can I rollover at the same price Thanks Peter September 28th, 2011 at 6:04pm Yes, exactly. You would close your position for a profit without having to wait until expiration to exercise the option. Ankur September 28th, 2011 at 8:00am Really good information on Options. I had one question - Suppose I buy a an option Call 5000 for Rs 30 whereas the index is at 4950. Within 2 hours, index moves to 4990 and option premium is Rs 35. Can I sell the contract now and earn Rs 5 per lot as profit though the index did not reach 5000 Thanks Peter September 18th, 2011 at 11:37pm Risk-free Me too, please let me know when you find such strategies -) aparna September 18th, 2011 at 11:34pm I want to learn risk-free option trading in Indian market. Suggest me some website for it. NAGESH September 4th, 2011 at 11:30am First time I found more information about options. Danke vielmals. Peter August 3rd, 2011 at 5:55pm Both futures and stocks have a delta of 1 so hedging with a future is much the same as hedging with a stock. Raj baghel August 3rd, 2011 at 1:08am is there any help for hedging in future with respect to callput. Peter August 1st, 2011 at 5:48pm Please see the in-the-money page. Arul August 1st, 2011 at 7:02am what is in the money call amp put Peter May 12th, 2011 at 11:05pm Hi spinnerrobert, yes, you can exit an option position at any time prior to the expiraton date. Peter May 12th, 2011 at 11:04pm Hi Azaragoza, you can check out my option pricing spreadsheet for the formula. spinnerrobert May 12th, 2011 at 8:29pm My qestion is let say i own akam and buy option for either put or call. I want to sell it right after i purchase the contract let say within one hour. Is that allow azaragoza May 5th, 2011 at 3:15pm what is the formula you use to optain the PnL charts, do you have an example Peter February 28th, 2011 at 3:05am Hi Jai, it really depends on what market you039re looking at and what your view is of this market i. e is it trending upwards, is there a lot of volatility etc That039s what039s great about options - the strategies vary according to lots of factors. Jai February 24th, 2011 at 11:14pm Would you tell which are the best available statergies in the option market now S. Vivek February 7th, 2011 at 4:48am can you tell me short on options and how its works UOG December 13th, 2010 at 1:26pm Hello, I think your blog is epic. Congrats. Peter December 7th, 2010 at 1:25am You039d need to check with your if they can provide this service. I know that Interactive Brokers provide an API to plug external systems into that operates over the Internet. DAJB December 6th, 2010 at 3:38pm If one is using computational systems as an aid to decision making, then is there a source to receive streaming real time prices over the internet in a way which could be easily integrated into a system Thanks, Peter October 31st, 2010 at 3:53am Premium is the price of the option as it is traded in the market. Commissions (aka brokerage) are what you pay to your broker for executing your trade. 1. You would lose the premium plus any commissions paid to the broker, so 32.95 2. Depends on where the stock is in relation to the strike price. If you were very confident that the stock will not be above the strike price by the expiration date, then you would sell the option back at whatever price you could get and the loss would be 32.95 less (price sold for 2.95). 3. You will only lose the premium paid (plus commissions) i. e. 32.95. Hoffe das hilft. Let me know if anything is unclear. Anonymous October 29th, 2010 at 10:16pm I am using Thinkorswim. I haven039t seen about premium. So, I am wondering that what the differences between quotpremiumquot and quotcommissionquot are I bought long call GLD at 128 and expire Oct 2010, I got info from Thinkorswim max profit infinite, max loss 30(not including possible dividend risk), cost of trade including commissions 302.95 32.95. My question are 1. If the strike price expired Oct 31, 2010 is 125, how much would I loss (30 or 2.95 or 32.95) 2. Before the end of expiration, I thought that the market would go down. Which one should I pick between quotsell it before expirationquot or quotdo nothing in order to let it expired. quot How much does it cost of both of them 3. If the strike price expired Oct 31,2010 is 130, what will happen if I do nothing and let it expired Peter October 21st, 2010 at 4:21am Depends on the country and what your main form of income is I039d say, whether the trade is treated as capital gains or income. syrus October 21st, 2010 at 2:08am What is the tax liablity of a option trading when option is exercised. whether it will be profitable after payment of commission to broker and tax. is there any safe net to safeguard profit Peter October 18th, 2010 at 5:15pm Yes, you can surely exit an option position by trading out of it prior to the expiration date. Kartik October 18th, 2010 at 8:03am This explaination talks about option in case of expiry but what in case of trade which takes place in between the expiry date. Peter September 17th, 2010 at 2:26am Hi Meghna, just because there are no bids out there doesn039t mean there aren039t any buyers. You can just enter a sell order into the market and if the price is right a market maker will take it. Meghna September 17th, 2010 at 2:19am Hi Peter, I know that i can reverse the position by selling in the same market. But in electronic trading generally bids are not available for deep ITM OTM options, while in OTC market I can easily reverse the position by paying some what higher to the broker. Hence kindly clarify how to deel with such situation in e-trading like quotIndian Niftyquot. Peter September 15th, 2010 at 6:39am Yep, you can just reverse the option position by selling the same option contract in the option market. Meghna September 15th, 2010 at 5:25am HI, Say if I am buying an in the money European option with an expiry of 4 months and If the option is deep ITM or OTM during at the end of 2nd month and if i want to crystallize my profits than is there any way out for it Peter September 5th, 2010 at 5:15am It039s hard to beat Interactive Brokers on brokerage and platform functionality. Although I039ve heard that Think or Swim have a great platform also. ramesh September 5th, 2010 at 12:32am Which firm has best trading tools and low commissions Peter September 2nd, 2010 at 5:55pm I use and can recommend Interactive Brokers. They are a US based company and you don039t have to live in the US to open an account with them. NaZZ September 2nd, 2010 at 7:02am I stay in Thailand(in Asia), how can I start to trade because I do not any account with any broker in USA. Can you suggest me broker039s web site to open account and trade. Peter August 29th, 2010 at 5:07pm Hi Sam, thanks for the feedback Yes, I think that simple naked long positions are still useful and obviously have the most bang for buck so to speak. It039s just that option traders need to understand the factors that affect an option039s value - specifically volatility. Often you may purchase a call option and even though the stock does rally the call option won039t gain any value - or could even lose value in the market. This is because the drop in implied volatility has played a larger role in the option039s value than the move in the stock price. This can be discouraging to new option traders. But this doesn039t mean that naked call and put buying should be avoided. just needs to be understood. Sam August 29th, 2010 at 10:41am hi Peter, it039s really nice website you have. Anyway, talking about options strategy. based on your experience, is it still useful using only simple long call or put. because i heard that these are useless, mostly worthless. Peter August 29th, 2010 at 5:44am Hi Rajesh, are you located in the US If so, the following companies provide option courses and training rajashekargoud August 27th, 2010 at 12:11pm i am interested option please suggest me good insitituion for traning and from where i should start option(instial investments)and for dealing in option we should have any experiance Peter August 26th, 2010 at 12:31am Hi Raju, thanks for the feedback. if you have any other suggestions for the site, please let me know. raju jee August 25th, 2010 at 9:59pm hi. jst go thru ths site and m stant abut knowing option stategy. plz teach me more and CONGRAT 4 ur valuable meteriel. Peter August 18th, 2010 at 6:57pm Hi Dale, HPQ is currently at 41.36 so your put options are ITM for the buyer, which means you039re looking at being exercised and taking delivery of the stock at 45. With expiration tomorrow your put has a delta of -1, which means you039re effectively long the stock now. What you do now depends on your view of HPQ. By selling a put, I would say that you must have been somewhat bullish in the first place to be prepared to hold the stock at 45. although HPQ has take a sharp dive lately, maybe your view has changed. If that039s the case you could sell out of the puts tomorrow and cut your losses on this trade. Or, if you want to continue holding the stock, then why not have a look at writing some September 43 calls You will limit your gains if the stock gets there but will have the immediate gain of income from the premium received. Dale Brooks August 18th, 2010 at 6:00pm I am short the hpq jan 12 45 put, what is a good stategy to limit my risk on the down side. Should I go long the same put at the same strike. Thank you Dale Peter August 14th, 2010 at 4:00pm Hi Amit, there are two firms that provide this kind of training Amit Sharma August 14th, 2010 at 2:06pm Want to learn Option Strategy with prctical Knowledge Contact. 9818759927, 9211663645 Peter August 14th, 2010 at 6:28am shamsul idrisi August 13th, 2010 at 12:27pm i want to learn option trading please suggest me some good training center Peter August 6th, 2010 at 2:00am Interesting. do you know of a good place to source the putcall ratio numbers Brad August 6th, 2010 at 12:44am I think that the best overbought oversold indicator and a reversal signal is when lets say a stock is in an up trend than for a couple of days in bound-range. the signal comes with a sudden PUTCALL ratio change with a significant volume AUMKAR August 3rd, 2010 at 1:21pm What will be happen if the NIFTY STRAIT go 100 anjanappa July 30th, 2010 at 2:04am call opt put optns strategies, i am very succsed in this field pl anybody try and earn get more money thank u Peter May 26th, 2010 at 12:57am No, OTC can mean a transaction between two parties for any type of financial instrument - even stocks can be traded OTC. Maria May 25th, 2010 at 9:16am When somebody talks about OTC Commodities: does this only mean Commodities options Peter May 11th, 2010 at 6:34am It039s where you buysell the underlying to reduce your delta exposure. piyul May 7th, 2010 at 8:24am what is hedging stratges roshan March 27th, 2010 at 8:18am wat is option101 Peter July 19th, 2009 at 8:18am Hi Yogesh, any strategy that has unlimited updside profit potential e. g. Long Straddle, which allows for unlimited profit if the stock trades up or down. yogesh July 18th, 2009 at 5:11am which strategies use for give the more profit plz reply the answer priyal May 9th, 2009 at 4:25am for understanding option u have to read more books amp be practical Vinesh May 6th, 2009 at 9:55pm Hi, i am Indian Investor and trader. I have just this website few days back and i want to tell you this is best site on Options Trading and imparting knowledge on the subject. Congratulations. Admin December 8th, 2008 at 3:21am Yes, you sure can trade online. I use interactivebrokers who have a great font end and pretty low brokerage. You could also try tradeking lisa Ascolese November 22nd, 2008 at 8:56am Who would I call if I wanted to trade options. Is this something that I could do online chandi November 12th, 2008 at 7:00am I want to know what r the Riskless Strategies in Option Trading. That will give money in any market condition. Admin November 7th, 2008 at 7:03pm Sorry, I don039t understand your question. Could you be more specific please prafulla November 3rd, 2008 at 11:39am what r the proces for invest on it. Add a CommentOption Trading Strategies NSE Central brings you information on profitable NIFTY Index Options Trading Strategies on the NSE-India exchange. The strategies are computed and published at the end of every trading day. Data for options expiring in the current month and two subsequent months are computed and published. Though NSE Central list various strategies, the site will not recommend any specific picks. Users can select a winning strategy after doing a thorough analysis of the market trends. Have a sense of market direction before you pick a strategy. Why use spread strategies Bulls and Bears take turns to create turbulence in the market. One can profit in the trending market by choosing an appropriate strategy. Along with the clear direction of market trend (bullishbearish or range bound), one must use the market volatility data, both historic and implied, as well as Open Interest information to pick a credit or debit strategy One can also predict where the market WILL NOT reach by expiry date and bet on an OTM position, say you choose a Bull Put Strategy with Break Even Point well below the Strong Support of NITY and you are sure NIFTY will not breach the support level by expiry, and make some easy money every month At the end of each trading day, various strategies are computed for various combinations of StrikePremiums. Use the filters in table columns to narrow down your selection. The Risk-Reward Chart will help you visually see the strategy risk reward, break even points and the current level of NIFTY. Finally, spread strategies will help you limit the losses incase the market moves against your directional call. Use STRATEGY SELECTOR to narrow down on the right strategy Option Spread Stratagies Computed on. 07-MAR-2017 E. O.D