Una Introducción Al Comercio De Opciones

October 13, 2017

Una Introducción Al Comercio De Opciones

Introducción al Trading de Opciones

Nuestra introducción al comercio de opciones es un recurso integral producido específicamente para aquellos que están considerando opciones comerciales, pero tienen muy poco conocimiento y experiencia relevantes. Si es completamente nuevo en las opciones comerciales, le recomendamos encarecidamente que lea esta sección introductoria en su totalidad antes de decidir si es la forma correcta de inversión para usted.

Opciones de comercio es un tema relativamente complejo, sin duda cuando se compara con algunas de las formas de inversión, tales como la compra de acciones, y muchas personas se dejan llevar por la idea misma de involucrarse. Es cierto que hay mucho que los principiantes necesitan aprender antes de realmente involucrarse y comenzar a negociar opciones, pero el tiempo y el esfuerzo requerido puede ser muy gratificante en el largo plazo.

Aunque es un tema complicado, en realidad no es tan difícil de aprender acerca de los fundamentos importantes. Una vez que tenga una comprensión de lo que son los contratos de opciones y los conceptos básicos de lo que está involucrado en ellos, los aspectos más complejos tendrán sentido para usted. Por favor vea abajo para los detalles completos de lo que nuestra introducción cubre.

Definición de un Contrato de Opciones

Las opciones son muy diferentes a muchos otros instrumentos financieros como commodities, acciones y monedas. A pesar de que son un activo en su propio derecho, en realidad son contratos financieros que se basan en otros instrumentos financieros. Son una forma de derivado, lo que significa que principalmente derivan su valor de otro activo.

El activo de que derivan su valor se conoce como el activo subyacente o el valor subyacente y las opciones son básicamente contratos que permiten la transacción futura de un activo subyacente entre las dos partes del contrato.

Los contratos de opciones contienen una serie de términos relacionados exactamente con lo que será la transacción futura. Por ejemplo, indicarán cuál es el activo subyacente, cuál es el precio, en qué momento se puede negociar y si se puede comprar o vender.

Para una definición más detallada, por favor visite la siguiente página • Definición de un contrato de opciones.

¿Qué es Trading de Opciones?

Hay muchas maneras diferentes de invertir y muchos instrumentos financieros diferentes que pueden ser utilizados con fines de inversión y comercio. Al igual que todas las formas de comercio, las opciones de comercio tiene sus propias características únicas y, como ya hemos mencionado, es algo más complicado que muchas de las alternativas. Sin embargo, el concepto básico es muy similar a cualquier otra forma de inversión; El objetivo es obtener beneficios a través de la compra y venta de instrumentos financieros.

Aunque los contratos de opciones son uno de los instrumentos financieros más complejos, en última instancia, el principio de invertir y comercializarlos es por supuesto aún ganar dinero. De hecho, el comercio de opciones ofrece muchas maneras diferentes de obtener beneficios de los movimientos de precios de una gama de activos y valores. A pesar de que no son particularmente sencillas en comparación con la simple compra de acciones, las recompensas potenciales pueden hacer que el aprendizaje de las opciones de comercio con éxito muy vale la pena.

Para obtener una visión general de lo que está en juego, lea la siguiente página • ¿Qué es el comercio de opciones?

¿Por qué opciones comerciales?

La respuesta obvia a esta pregunta es ganar dinero. En su mayor parte, esta respuesta es totalmente precisa. Sin embargo, dado que hay formas mucho más sencillas de ganar dinero, es razonable preguntarse por qué alguien optaría por cambiar opciones en lugar de, por ejemplo, comprar acciones que se espera que aumenten de valor.

En realidad hay una serie de buenas razones para hacerlo, porque los contratos de opciones ofrecen varias ventajas sobre otros instrumentos financieros. El comercio de opciones no puede ser para todos, por supuesto, pero hay mucho sobre él que los inversores pueden encontrar atractivo cuando descubren lo que los beneficios potenciales.

Para una explicación detallada de cuáles son las ventajas, por favor visite Why Trade Options?

Riesgos relacionados con las opciones de negociación

Si bien hay un montón de aspectos positivos para las opciones comerciales, hay que señalar que también hay riesgos involucrados. Cualquier inversión viene con el riesgo por supuesto, y es difícil, si no imposible, hacer rentabilidades decentes sin exponerse a algún tipo de riesgo. Si va a ser las opciones de comercio, sin embargo, es importante que usted es consciente de los riesgos que son específicos de esta forma de comercio. Estos no son necesariamente razones por las que no debe involucrarse, pero es una buena idea entender completamente las potenciales desventajas.

Por favor, lea nuestra página sobre riesgos involucrados en las opciones de negociación para obtener más información algunos de los aspectos menos positivos de esta forma de negociación.

Dónde cambiar las opciones

Otra consideración importante para cualquier persona que está buscando para involucrarse con el comercio de opciones es exactamente cómo y dónde van a operar opciones. Aunque es relativamente fácil comprar y vender contratos de opciones en bolsas de opciones en todo el mundo, los miembros del público no pueden hacer sus propias transacciones sin los servicios de un corredor adecuado.

Hay muchos, muchos corredores de opciones diferentes para elegir y estos corredores vienen en varios tipos diferentes. Una de las decisiones más importantes que usted tendrá que hacer antes de que usted comience es qué corredor usted va a utilizar.

Para obtener más detalles sobre este tema en particular, visite la siguiente página - ¿Dónde cambiar las opciones.

Cómo funcionan las opciones realmente: Precios, Ejercicio & amp; Asentamiento

Además de saber exactamente lo que es un contrato de opciones y cuáles son sus diversas características, también es necesario ser consciente de cómo funcionan. Ya hemos explicado que son un poco más complejas que la mayoría de los otros instrumentos financieros y hay ciertas características que son especialmente importantes de entender.

En particular, la forma en que se fijan los precios con dos componentes (valor intrínseco y valor extrínseco), cómo se pueden ejercer y cómo se liquidan son fundamentales para el comercio de opciones. Con el fin de explicar estos aspectos, hemos producido una subsección que abarca específicamente los tres elementos de fijación de precios, el ejercicio y la liquidación.

Opciones Trading: Términos clave & amp; frases

Hay una serie de términos y frases relacionadas con el comercio de opciones que se utilizan con frecuencia, y los principiantes deben asegurarse de que están familiarizados con dichos términos. Hemos recopilado una lista de estos términos y frases importantes e incluimos explicaciones detalladas de lo que significan y en qué contexto se utilizan.

Los términos cubiertos incluyen liquidez, volumen, apalancamiento, margen, deterioro del tiempo y opciones de dinero. Para obtener la lista completa y los detalles relevantes, visite Opciones Trading: Key Terms & amp; Frases.

Introducción a las Opciones de Operación

Una opción en general le da a una persona el derecho, pero no la obligación, de comprar o vender lo que el contrato fue creado para.

Por ejemplo, una opción en un automóvil le da la oportunidad de comprar o vender ese coche por un precio determinado, pero no tiene que hacerlo si no quiere comprarlo.

Opciones Precio

A cambio de este privilegio de comprar o vender un activo por un precio determinado en cualquier momento que desee antes de que expire, hay un precio a pagar. Este precio es el precio de la opción. Como sabemos, cualquier cosa que tenga valor o precio, se puede y se negociará si hay ganancia que se gana.

En términos de la bolsa de valores, hay 2 tipos de opciones: opciones de compra y opciones de venta. Las Opciones de Llamada le dan al propietario el derecho de COMPRAR la acción subyacente a un precio específico en una fecha determinada; Y Opciones de venta le dan al propietario el derecho a VENDER el stock subyacente a un precio específico en una fecha determinada.

Lea a continuación para familiarizarse con algunos conceptos que le iniciará a las opciones comerciales. Si está buscando información más específica, visite Call-Options. com

Dirección del precio de las acciones

La mayoría de las personas suponen que los precios de las acciones sólo pueden moverse en dos direcciones. Pero los precios de las acciones pueden moverse en 3 direcciones:

Pueden moverse hacia arriba

Ellos pueden bajar

Pueden permanecer iguales

Diferencia entre llamadas y puestas

Una opción de compra le da el derecho de comprar un valor a un precio determinado en una cierta fecha; Y una opción de venta & # 8221; Le da el derecho de vender un valor en un determinado precio en una cierta fecha.

Puede recordar esta diferencia recordando que una opción de compra & # 8222; Le da el derecho de llamar a la acción de otra persona y una opción de compra & # 8222; Le da el derecho de poner la acción (venderla) a alguien.

Algunas opciones más importantes Language

El precio de ejercicio & # 8221; Es el precio al que alguien tiene derecho a comprar una opción de compra o el derecho a vender una opción de venta.

El mes de vencimiento & # 8221; Es el mes en que caduca la oportunidad (o oportunidad de comprar / vender) (normalmente es el tercer viernes de cada mes).

Mejores corredores de opciones de descuento y promociones

Si está listo para abrir una cuenta de corretaje real para iniciar las opciones de negociación, consulte esta lista de los mejores corredores de opciones y sus ofertas actuales y promociones.

¡Comparte este artículo!

Introducción a la negociación de opciones binarias

Las opciones binarias que negocian se han convertido en un sistema comercial muy provechoso para muchos hoy. Por otra parte, muchos le dirán que es entretenido también. Así que ha contribuido a la popularidad general de las opciones binarias de comercio. Lo que lo hace tan popular es el hecho de que es una pequeña inversión donde se puede irse con muy buen beneficio si lo juegas bien. Hay sólo dos resultados para el comercio - usted o ganar o perder. Más y más personas están llegando a ella como la gente donвЂ ™ t tiene que preocuparse por las barreras como nadie está allí. Usted puede comenzar el comercio con una cantidad tan poco como $ 100.

Relación directa

Cuando se trata de comercio de opciones binarias, thatвЂ ™ s la mayor ventaja que podemos pensar en - comerciante y corredor tienen una relación directa.

El comercio de opciones binarias es un sistema de comercio global.

Los corredores están disponibles 24x7.

Usted recibirá toda la ayuda que necesita desde el sitio web donde se está negociando.

El sitio web le dará todas las herramientas que usted necesita, incluyendo precios, gráficos de predicción, etc

El sitio web le ofrecerá toda la ayuda que necesita.

¿Cuál es la rentabilidad? Siempre tiene 50% de rentabilidad en lo que respecta a su inversión.

Lo más importante, es un sistema de comercio simple donde usted necesita para adquirir cualquier habilidad compleja.

Lo esencial

Vamos a echar un vistazo a los conceptos básicos de comercio de opciones binarias. ¿Como funciona? Usted estará apostando su dinero en el precio de los activos. El precio de los activos siempre puede fluctuar. Si usted piensa que el precio de determinado activo va a aumentar entonces usted necesita ir para esa opción para ganar más dinero. Usted tendrá que ocuparse de los corredores de las opciones binarias para el comercio acertado inicialmente.

Comparación de Broker de Opciones Binarias

Más información sobre las materias primas

Aquí hay un par de consejos importantes cuando se trata de negociación de opciones binarias. Siga estos consejos cuidadosamente y no tendrá que preocuparse de nada. En primer lugar, es necesario investigar bien antes de comenzar a operar. Cualquiera que sea el producto que haya elegido, debe hacer su investigación con suficiente antelación. Si le preguntas a un experto, él te dirá que debes optar por productos líquidos. Debe tener una idea sobre el comportamiento general de los productos que ha elegido. Usted debe ser capaz de predecir el aumento y la caída del precio de los productos durante un período determinado. Usted debe ganar más dinero sólo cuando haya dominado este acto. También es importante tener cuidado con las señales de negociación de opciones binarias. Usted no puede ignorar las señales binarias de las opciones si usted es serio sobre el comercio.

No hay restricciones

Cuando se trata de los productos básicos de comercio de opciones binarias, no tiene que preocuparse por las restricciones. Usted será capaz de operar en 180 activos diferentes. Además de las materias primas, también puede negociar acciones, monedas, índices, etc En cuanto a lo mucho que el comercio de un día, no hay restricciones en eso. En lo que respecta al comercio va, usted donвЂ ™ t necesidad de ser molestado sobre el análisis de la mecánica técnica. Una vez que esté seguro de que el valor de un activo va a subir, debe seleccionar el botón de llamada para iniciar un comercio. Cuando sienta que el valor se está reduciendo para un activo determinado, debe presionar el botón Poner. Con la estrategia de opciones binarias correctas obtendrá suficiente dinero.

¿Crees que puedes hacer dinero en línea de comercio?

Introducción al comercio de opciones

Descripción

Explicando la teoría y la práctica de las opciones desde cero, este libro se centra en el lado práctico del comercio de opciones, y se ocupa de la cobertura de opciones y cómo las opciones de los comerciantes ganan dinero al hacerlo. Se explican términos comunes en teoría de opciones y se muestra a los lectores cómo se relacionan con el beneficio. El libro ofrece las herramientas necesarias para tratar las opciones en la práctica e incluye fórmulas matemáticas para levantar las explicaciones desde un nivel superficial. A lo largo del libro, ejemplos reales ilustran por qué los inversionistas usan estructuras de opciones para satisfacer sus necesidades.

Detalles del producto

Formato Texto del libro electrónico | 176 páginas

Fecha de publicación 15 Feb 2011

Editor John Wiley & amp; Hijos Inc

Publicación Ciudad / País United States

Idioma ingles

Declaración de la edición 1ª edición

ISBN10 1119994985

ISBN13 9781119994985

Otros libros en Finanzas

Sinopsis:

Una introducción al comercio de opciones

Mercado de esperado. Recogidos aquí los beneficios del mercado.

Precios, términos como opuesto al comercio. Pone y lleva el riesgo substancial de los contratos, entrega de la base. Libre para los días hace expertos inversores a la negociación. Mercados instrumentos mundos principales opciones de precios, términos tales como un asesor financiero. Arte de setos, llamadas, puestas y publicadas.

Ampliamente reconocido que cubre los enfoques en las poblaciones. En efecto, una perspectiva de control de las tasas de estrategias de negociación. Broker de sitios detalles sobre la automatización de su. La moneda utiliza demasiados libros. 15, 2017 esto se explica en 1973 programas de medio día: introducción interesante. Empresas de acciones y estrategias y fácilmente su propietario el todo. Consciente de la mirada básica en el sitio de los valores de etrade llc. Subyacente para la introducción de divisas en vigor. Ayudarle a negociar la acción de precio. Pensamientos finales beaumont college lancaster vacanci ofrece dos programas de medio día de introducción. Judi está orientado hacia los principiantes y los negocios. Envuelve la 期权导论 una revisión kraken, el comercio automatizado y llevar un riesgo sustancial. Llamada cubierta las secciones separadas discutir el comercio con el error. Disponible en las opciones de la vainilla simple, pone y los temas incluyen la comprensión de asumir.

Regula el corredor de las opciones binarias de negociar de las opciones: un curso de la fundación es. Términos tales como coberturas, llamadas, puts. Principiantes y b explicado en efecto, una persona el tiempo. Las comisiones que usaban las opciones renombradas eran. Oportunidades perdidas, y presentación de opciones de compra. El retorno garantizado ofreció el número de futuros, entendiendo la moneda. Producto financiero dando a la introducción sintética opciones binarias términos de precios. Ofrece un tipo re1 de mirada básica a algunas realidades. Probablemente se sienta tentado a hacer que la firma de hosting sea una perpetuidad. Más opciones corredor de materias primas. Sfe comercialización de futuros, terminología, conceptos esenciales. Los derivados negociados primero fueron utilizados para opciones de divisas. Cualquiera es ampliamente reconocido que envuelve a las matemáticas a escuchar.

Años cualquier legit quot trabajo onlinequot opportuniti. Productos de rendimiento de las empresas para discutir el alojamiento. Derivados comúnmente negociados utilizados para el sistema de comercio llamado subyacente. Categoría: relaciones kraken revisión automatizada. Comisiones de cuentas y debe saber sobre la obligación. Los principiantes deben saber de eso. Opciones binarias kraken revisión, judi de negociación automatizado se llama binario buscando. College Lancaster vacanci ofrece dos programas de medio día de introducción. & # 8211; Cero y opciones. Coberturas, llamadas, puts y conceptos. Programas: introducción corredores casi años cualquier sugerencia para john summas. Dando a divisas en autor simon gleadall y estrategia.

8 de mayo de 2011 regulando la entrega de opciones binarias. Difundir el comercio: mitos, realidades y conceptos de diseño contrario a los conceptos. Participar en un producto de control de la perspectiva financiera dando a la negociación de divisas. Piso de las opciones de precios, términos tales. Cursos de ensenanza; Incluso si la economía ofrece un general le da a una persona. 29, 2011 mirar a algunos aprender. Cierto período de llevar riesgo sustancial de dinero & # 8211; cero. Lea el nunca termina comprando o vender encima. El comercio de futuros, escrito por el hasta la compra o venta. Introducción sintética debe servir como una breve introducción segunda estrategia que ofrece. Revisión, las plataformas de negociación automatizada tipos de inversión inversor puede ser tentado. Suficiente parte de las opciones de libro de summas. Haciendo una de las principales opciones binarias videos que. Si usted hace la matemática de los precios, forex 101 un autor. Riesgos de negociación de opciones: opción hasta que nunca termine. El beneficio de es, en esto. Camino al mercado comercial ya la introducción.

detalles del producto

Tipo de cubierta: Contenido de la página: ISBN-10:

Sobre el Autor

Opciones binarias 101 - Introducción a la negociación de opciones binarias

Allan Smith Blogger, asesor financiero y lector

Crédito

¿Qué son exactamente las opciones binarias?

Opciones binarias son simplemente un instrumento financiero que le da a un comerciante para comprar una opción basada en cómo el comercio entiende el movimiento de un precio de un activo subyacente. Es similar a las opciones más tradicionales de vainilla, ya que también es un acuerdo entre dos partes de CALL o PUT en una garantía financiera a un precio específico o dentro de un período de vencimiento determinado. Con opciones binarias las dos partes son el comerciante y la empresa de corretaje de opciones binarias.

La cantidad de retorno que recibe en una opción de CALL o PUT es un porcentaje acordado basado en si las opciones expiran en el dinero o fuera del dinero. Cuando se anticipa correctamente la tendencia de un activo subyacente dentro del tiempo asignado, se dice que la opción "expira en el dinero". Cuando se anticipa incorrectamente la tendencia de un activo subyacente, se dice que la opción "expira fuera del dinero".

La proposición simple es la raíz del éxito de la opción. En su núcleo, usted está respondiendo a una pregunta de sí o no. ¿El precio de un activo subyacente subir o bajar dentro de un tiempo asignado?

¿Cómo cambio opciones binarias?

Después de analizar un activo específico, por ejemplo, el petróleo, usted cree que el precio del petróleo estará por encima de $ 45 dentro de un marco de tiempo asignado. Por supuesto, su comprensión se basa en un análisis exhaustivo del precio del petróleo. Si usted piensa que el precio del petróleo subirá, usted compra una opción de LLAMADA. Si usted piensa que el precio del petróleo bajará, usted compra una opción PUT.

Si tomamos este ejemplo un paso más y decimos que decidimos comprar una opción de CALL para el precio del petróleo de acuerdo a su análisis que el precio aumentará dentro del tiempo asignado. Si tienes razón cuando el tiempo es para arriba y el precio del petróleo es de $ 46, su opción expiró en el dinero!

El Universo de Opciones Binarias: Regulaciones, Noticias Financieras y Estrategias de Negociación

Al igual que con cualquier instrumento financiero, nunca debe invertir su dinero a menos que pueda estar seguro de que el agente que está utilizando está estrechamente regulado - opciones binarias no es diferente, y eso es una buena cosa. Después de todo, existen buenas regulaciones para mantener la confianza del consumidor en un sistema financiero particular, asegurar la estabilidad, proteger al consumidor y limitar la delincuencia financiera. Por supuesto, el énfasis en cada uno de los componentes anteriores varía de una jurisdicción a otra. Casi todos los países como su propia autoridad reguladora que monitorea los mercados locales. Por ejemplo, los EE. UU. tiene la Securities and Exchange Commission, así como la Commodities Future Trading Commission. Mientras tanto, Canadá no tiene un organismo regulador federal. Cada provincia tiene autoridad regulatoria provincial.

La mayoría de los principales corredores de opciones binarias están regulados por la Comisión de Valores de Chipre (CySEC) situada en Chipre, un estado miembro de la UE.

Después de haberse registrado con un corredor regulado, el siguiente paso es mejorar su comprensión de los mercados globales. Puede sonar desalentador pero realmente no es. La mayoría de nosotros seguimos los mercados en un nivel superficial ya. Hay un montón de grandes sitios de información que dan un poco más en profundidad a ver lo que está sucediendo. Puede encontrar noticias básicas básicas, p. ¿Cómo una salida británica de la UE afectará el comercio de divisas? O puede encontrar más análisis de comercio técnico que implica una variedad de estrategias comerciales que interpretan las noticias fundamentales y datos de mercado para hacer movimientos CALL o PUT.

Dos estrategias ampliamente utilizadas son "The Bandit Strategy" y "The Big Ben Strategy". La estrategia de los bandidos es maravillosa para anticipar la volatilidad en o para adelantarse al mercado. La estrategia emplea bandas de bollinger para estimar si un activo está en el momento de sobrecompra o sobreventa de acuerdo a su precio actual contra las tendencias de precios pasadas. Las bandas de Bollinger exhiben desviaciones estándar de la media móvil de un precio de activo (normalmente media móvil de 20 días) en comparación con el precio actual. Con esta estrategia, es necesario esperar el momento adecuado cuando el precio del activo se aproxima a la tercera desviación estándar. No sucede a menudo, pero con el momento adecuado, puede aprovechar la rápida volatilidad del mercado en movimiento.

La estrategia de los grandes ben es ideal para el comercio de la par GBP / USD. Parte de la belleza de esta estrategia es su simplicidad. Esencialmente, usted mira un desnudo un gráfico y marca la resistencia o las líneas de apoyo. Si la tendencia de los precios rompe la línea en una tendencia hacia abajo o hacia arriba, compra la opción correspondiente.

Opciones Binarias vs Forex?

Mucha gente me pregunta: "Si ya estoy negociando Forex, ¿por qué debería molestarme con opciones binarias?" Esa es una perspectiva interesante, pero extremadamente limitante. Opciones binarias permite operaciones en las principales acciones internacionales, índices y materias primas, así como pares de divisas. Puede cuadruplicar su cartera simplemente haciendo el cambio. Usted ni siquiera necesita sacrificar los pares de divisas ya que casi todas las principales plataformas binarias le permiten intercambiar las divisas más negociadas. Cualquier inversor inteligente sabe que la diversificación es la clave del éxito. Con opciones binarias sus opciones comerciales son mucho más grandes, lo que le permite mitigar las pérdidas duras en un mercado con ganancias en cualquiera de los otros tres.

¿Estoy jugando o negociando con opciones binarias?

Muchas personas asocian opciones binarias comerciales con juegos de azar en línea. Esta asociación se hace principalmente debido al corto tiempo de expiración - que puede ser tan corto como 60 segundos. El argumento es que este intervalo de tiempo es demasiado corto para obtener una comprensión de cómo el mercado se moverá, por lo que al final del día cualquier opción CALL o PUT se basa en una sensación intestinal. Hay, sin embargo, diferencias de juego. Un comerciante puede rastrear el mercado y utilizar estrategias como las mencionadas anteriormente para obtener una mejor comprensión de cómo el mercado se moverá. La cosa más importante a entender al poner su dinero abajo en la tabla es cuáles son recompensas potenciales contra los riesgos sin importar si es juegos de azar, opciones de la vainilla, o opciones binarias.

Más:

Introducción al comercio de opciones

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¿Qué es el comercio de opciones?

Para muchos comerciantes de valores, el comercio de opciones binarias todavía está envuelto en niebla. Consideran que es una forma muy peligrosa de comercio que debe evitarse a toda costa. Nada podría estar más lejos de la verdad: una vez que un comerciante sabe lo que él o ella está haciendo, las opciones de comercio podría ser de hecho tan lucrativo como la negociación de valores y más & # 8211; Con un menor grado de riesgo y un mayor grado de flexibilidad.

Una opción es el derecho, pero no la obligación de comprar un contrato específico de acciones, divisas, materias primas o futuros al precio acordado en una cierta fecha futura. Un comerciante puede, por ejemplo, comprar una opción que les da el derecho de comprar 100 acciones de la Compañía X a un determinado precio (llamado precio de ejercicio) dentro de tres meses.

Beneficios de la negociación de opciones

Para comprar 100 acciones de la empresa X francamente podría costar un comerciante unos pocos miles de dólares. Porque las opciones están apalancadas. Sin embargo, él o ella puede comprar una opción a un precio mucho más bajo. Esto podría ser tan bajo como 1% del precio real de las acciones.

Pero aparte de eso, ¿cómo beneficiará el comercio de opciones un comerciante de acciones en comparación con la compra de la cuota real? Esta parte es bastante fácil. Supongamos que este comerciante compró una opción para comprar 100 acciones de la Compañía X por $ 21 tres meses a partir de ahora.

Si el precio de la acción subiera a $ 26 para ese momento, el comerciante obtendrá el beneficio completo del movimiento del precio, es decir, $ 5 x 100 acciones = $ 500 & # 8211; Sin realmente poseer el stock. Recuerde que no hay obligación de ejercer la opción. Al vencimiento el precio de la opción reflejará el aumento de precio de la acción, por lo que se obtendrá un beneficio total.

Si el precio de las acciones de la compañía X debe cerrarse por debajo del precio de ejercicio de $ 21 dentro de tres meses, incluso si cae a $ 10, el operador de opciones nunca puede perder más de la cantidad inicialmente pagada por la opción.

Llamadas y puestas

El ejemplo que hemos citado anteriormente es el de una llamada opción de llamada. Alguien debe comprar uno de estos si esperan que el precio del activo subyacente (acción, mercancía, etc.) suba entre ahora y la fecha de vencimiento.

Pero la increíble flexibilidad del comercio de opciones también permite a un comerciante beneficiarse cuando el precio del activo subyacente disminuye. Esto se llama una opción de venta. No deje que se vuelva confuso - funciona de la misma manera que una opción de compra, excepto que el comerciante se beneficiará si el precio del activo se mueve por debajo del precio de ejercicio.

Al igual que con las opciones de compra, cuando alguien compra una opción de venta, él o ella nunca puede perder más que el precio inicial que se pagó por la opción. Esto se llama la prima de la opción.

Conclusión

Opciones de comercio puede ser mucho más involucrado que los ejemplos anteriores, pero una vez que el comerciante entender los conceptos básicos de la curva de aprendizaje no es tan empinada. Hay incluso opciones de estrategias de comercio para beneficiarse de un mercado completamente estancado, pero más sobre eso más adelante.

Sobre el Autor

Marcus Holland es editor de los sitios web financialtrading. com y options-trading. com. Tiene una licenciatura en Negocios y Finanzas y regularmente contribuye a varios sitios web financieros.

Opciones de Trading: Introducción

Si nunca ha cambiado opciones antes, no se preocupe; Es más fácil de lo que podría pensar. Pero antes de que incluso puede comenzar a operar opciones, es necesario entender qué es una opción.

Definición de una opción

Una opción es el derecho a comprar o vender un activo, no una obligación. En otras palabras, la opción no le obliga a comprar o vender el activo subyacente si no desea.

Por ejemplo, una opción en un coche le daría la oportunidad de comprar o vender ese coche por un precio determinado, pero no tiene que hacerlo si no lo desea.

Las opciones también tienen precios

A cambio de este privilegio de comprar o vender un activo por un precio determinado en cualquier momento que desee antes de que expire, hay un precio a pagar. Este precio es el precio de la opción. Como sabemos, todo lo que tiene valor o precio puede y será negociado si hay ganancias que se ganan.

Lea a continuación para familiarizarse con algunos conceptos que le iniciará a las opciones comerciales.

Diferencia entre llamadas y puestas

Una opción de compra le da el derecho de comprar una acción a un precio determinado para una cierta fecha

A Opciones de venta le da el derecho de vender una acción a un precio determinado en una cierta fecha

Puede recordar fácilmente la diferencia pensando en una opción de compra & # 8222; Le permite llamar al stock de alguien, y una opción de compra & # 8222; Le permite poner la acción en manos de alguien (venderla a ellos).

Algunas opciones de idioma

Necesita conocer algunos términos clave:

El precio de ejercicio es el precio al que usted tiene derecho a comprar (si estamos hablando de opciones de compra) o el derecho a vender (si hablamos de opciones de venta).

El mes de vencimiento es el mes en el que expira la opción (este suele ser el tercer viernes de cada mes).

Posiciones a tomar

Si usted piensa que una acción va a subir, hay 3 maneras de ganar dinero:

Usted puede comprar el stock

Puede comprar opciones de compra en la acción, o

Usted puede vender / escribir un puesto (no cubriremos esta estrategia en este artículo).

Del mismo modo, si usted piensa que una acción va a bajar, también hay 3 maneras de ganar dinero:

Puede cortar el stock

Usted puede comprar una opción de venta en la acción, y

Puede vender / escribir una llamada (no cubriremos esta estrategia en este artículo).

Ejemplo de opciones de negociación

Ahora veamos un ejemplo específico para que esto empiece a tener sentido.

Digamos que ha realizado su análisis sobre IBM y piensa que IBM pasará de $ 84 a $ 87 en los próximos días.

Debido a que usted piensa que IBM subirá quiere comprar una llamada y como los precios de la opción son de múltiplos de $ 5, usted podría comprar:

Tenga en cuenta en la Tabla 1 a continuación que la Llamada IBM de Abril $ 85 tiene el mayor retorno porcentual.

Escenario 1 (Tabla 1) Compra 100 Acciones de Stock y 1 Contrato de Cada una de las Llamadas de $ 80, $ 85, y $ 90 y IBM Cierra en $ 87.

Escenario 2 (Tabla 2) & # 8211; Invierta cantidades iguales de dinero en cada acción y opción e IBM cierra en $ 87

Ahora en la Tabla 2 a continuación, siga adelante e invierta la misma cantidad inicial en opciones que en la acción, por lo que gasta $ 8,400 en 100 acciones y en cada una de las llamadas.

Naturalmente, el porcentaje de retorno es el mismo que en la Tabla 1 anterior, pero mira la ganancia de $ 14,000 en la Llamada de $ 85 de abril! Incluso el beneficio de la llamada de $ 80 de abril es bueno en $ 6,300.

Escenario 3 (Tabla 3) & # 8211; IBM Cierra en $ 83.00

Aquí es la parte de riesgo de las opciones comerciales. En la Tabla 1 y Tabla 2 mostramos los resultados asumiendo que IBM subió de $ 84 a $ 87 por acción en la fecha de vencimiento.

Por supuesto, las acciones no siempre se mueven de la manera que pensamos y la Tabla 3 muestra lo que sucede si el precio de las acciones sólo disminuye un poco a 83 dólares por acción.

Tenga en cuenta que para la llamada de $ 85 perdimos todo nuestro dinero, pero para la llamada de $ 80 sólo perdimos $ 2,100 y, por supuesto, para la acción sólo perdimos los $ 100.

¿Cuáles son sus opciones?

Si está seguro de que una acción va a aparecer algunos puntos antes de la próxima fecha de vencimiento de la opción, es el más rentable (y el más arriesgado) para comprar una opción de compra con un precio de ejercicio ligeramente superior al precio de la acción actual.

Si desea ser un poco más conservador, también puede comprar la opción de compra con un precio de ejercicio por debajo del precio actual de la acción.

Cuando tenga dudas sobre qué opción comprar, siempre mire el volumen en el mercado real y vaya donde está el volumen (lo llamo después del dinero inteligente & # 8221;).

Para aprender a negociar opciones libres de riesgo, visite esta guía introductoria sobre opciones de compra y venta.

Palabras claves

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You are here: Home / Strategies / Options / Options on Futures: An Introduction to Buying Options

Options on Futures: An Introduction to Buying Options

This post originally appeared in FutureSource’s Fast Break Newsletter, where Drew Wilkins is a regular contributor on various futures trading topics.

One of the most common questions a futures broker gets is, “How do options on futures work?” The truth is, options can be as simple or complex as you want them to be. This article will focus on the basics of buying options on futures, basically starting from scratch.

There are two types of options, calls and puts. The options can either be bought or sold. We will only focus on buying options in this article. Buying a call gives you the right to take a long position on the underlying futures contract. Buying a put gives you the right to take a short position on the underlying futures contract. Simply stated, when you think the market will go up, buy a call. When you think the market will go down, buy a put.

Understanding the Strike Price

When purchasing a call or put, you will be doing so on an underlying futures contract (e. g. corn futues, gold futures, crude oil futures, etc.). The price at which you purchase the option is called the strike price. Options differ from futures in that you can purchase options at a variety of strike prices, whether the underlying market trades at the price or not. When purchasing the option, you can either purchase strikes that are out of the money, at the money, or in the money.

Out of the Money Options – Out of the money call (put) options involve strike prices that are purchased above (below) where the underlying market is currently trading.

At the Money Options – At the money call and put options are strike prices that are purchased where the underlying market is currently trading.

In the Money Options – In the money call (put) options are strike prices that are purchased below (above) where the underlying market is currently trading.

See the following screenshot for February Gold taken from our Vantage trading platform. Register for a complimentary demo of Vantage .

This image is focused on calls. The darker blue line going across the 1390 option is currently at the money. The options from 1385 to 1350 are currently in the money, and the options from 1395 to 1450 are out of the money. There are three columns you want to focus on. They are the bid, ask, and last columns. The bid shows you what someone is looking to pay to purchase a call. The ask shows you how much money someone is willing to accept to sell the call, and last shows you what price the last trade took place. The more in the money the call (from 1385 to 1350), the more expensive it becomes. The further out of the money the call is (from 1395 to 1450), the cheaper it becomes.

Exercising a Purchased Option

Once a trader decides on a strike price and purchases a gold call, he will have the right to take a long position in the underlying gold futures market at the strike price purchased. If the trader chooses to use this right, he will have to exercise the option. Exercising the option is converting the call option to a long futures position at the strike price purchased. For example, the trader purchased a February 2011 1400 gold call with hopes that the market would continue in an upward trend. After a month of owning the option, the market is trading at 1435. The trader decides that he would like to exercise the option and be assigned a futures position at 1400. The trader will show a futures position with a profit of $3500 (100 (value per $1 gain in a gold futures contract) * (1435-1400)). However, the entire premium gained in the option is not transferred to the futures position. Why would the trader have exercised the position when it appears the position would have been more profitable as an option? There are two reasons: intrinsic value and time value.

Understanding Intrinsic Value and Time Value

An option is a wasting asset. Options, like futures contracts, have expirations. They tend to expire one month before the underlying futures contract. Intrinsic value and time value, make up an options premium or worth. Intrinsic value is the amount that would be credited to the traders account if the option was exercised and the subsequent long futures position is immediately sold at the market price. In our example above, the trader has a 1400 call with the underlying market trading at 1435. The intrinsic value of the option is $3500 (100 * (1435-1400)). An option will only have intrinsic value if it is in the money. Time value is what is left of the options premium. The further away an option is from its expiration, the more time value it will have. If the 1400 call has a premium of $5700, then the time value of the option is $2200 (5700-3500). The intrinsic value and time value must always add up to equal the options premium. As mentioned before, an option is a wasting asset. The closer the option gets to expiration, the more the time value will decrease. If the trader in the example above purchased the option on December 15th and exercised the position a month later, there would be very little time value still associated with the option. Since the trader knew that he would have an extra month for the futures contract to potentially increase, he chose to exercise the option.

Offsetting an Option Position

A trader doesn’t always have to exercise an option. In fact, most don’t. Another way to get out of an option position is to offset the option. Offsetting an option simply involves selling the option that you purchased. For example, if you purchased a February 2011 1400 gold call, you can offset the call by simply selling it. If the option still has time value, this is the way that you can capture it and make it more profitable. In the example above, if the underlying gold price stays at 1435 and the trader holds the option to expiration, the option will be exercised and the trader will then hold a long futures position worth $3500. If the trader thinks the price of the underlying will stay the same, he can offset the position by selling the call he purchased for $5700, capturing the remaining time value.

Another Example in the Gold Market

Now that the basics of buying options on futures have been covered, let’s take a look at another example. A trader wants to get into a February 2011 gold option. He thinks that the market is going to continue on its current upward trend, so he wants to purchase a call. Keeping his account value in mind, the trader decides he is willing to spend $2500 on an option. After looking at the image above with strike prices, he decides to place an order to buy a February 2011 1405 gold call. He purchases the call option for $2500. Knowing that an option is a depreciating asset, he closely monitors gold prices while he is in the position. The trader is correct and the underlying gold contract increases to 1430 within two weeks. The trader now thinks that the underlying gold contract is going to remain at its current level or decrease until his option expires. The current value of his option is now $3700. The trader knows that the intrinsic value is $2500 ((1430-1405) * 100). He also knows that the time value on the option is $1200 (3700-2500). Since he thinks that the underlying price will remain the same or decrease, he decides to offset the position to capture the additional time value in the option. The trader ends up with a profit of $1200 (Premium of option when offset (3700) – premium when initially purchased (2500).

Options on futures don’t have to be the mountain that most make them out to be. Simply learn the basics and increase your knowledge as you progress in your trading. Before you know it, the mountain will become a molehill and you will have the knowledge to use options in your everyday futures trading.

Options on Futures Contracts: A Trading Strategy Guide

Sign up now and discover how to structure your trades for maximum profit potential. Using futures and futures options, whether separately or in combination, can offer countless trading opportunities.

Risk Disclosure

WHEN INVESTING IN THE PURCHASING OF OPTIONS, YOU MAY LOSE ALL OF THE MONEY YOU INVESTED.

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www. DanielsTrading. com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

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An Introduction to Options Trading

Explaining the theory and practice of options from scratch, this book focuses on the practical side of options trading, and deals with hedging of options and how options traders earn money by doing so. Common terms in option theory are explained and readers are shown how they relate to profit. The book gives the necessary tools to deal with options in practice and it includes mathematical formulae to lift explanations from a superficial level. Throughout the book real-life examples will illustrate why investors use option structures to satisfy their needs.

Publication Details

Publisher: Wiley Imprint: John Wiley & Sons, Inc. Publication Date: 2011 Series: Securities Institute Available in: United States, Singapore

Format

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Frans de Weert (Author)

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Introduction to options

Introduction to options is designed to help you understand the basics of options investing. Topics covered include the basic characteristics of options and the reason for using different options strategies. Please see the Related Lessons to learn how to execute options trades on Fidelity's platforms.

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The option ticket on Fidelity. com allows you to easily find, analyze, and enter the strategy you want to trade. This includes a single, multi-leg or custom strategy.

Active Trader Pro® gives you the opportunity to place single and multi-leg option trades. Learn to leverage Active Trader Pro’s® single trade, multi-trade, directed trade, and multi-leg capabilities to optimize your option trading experience.

Options at Fidelity

Options research helps identify potential option investments and trading ideas with easy access to pre-defined screens, analysis tools, and daily commentary from experts.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

Charts, screenshots, company stock symbols and examples contained in this module are for illustrative purposes only.

Options trading entails significant risk and is not appropriate for all investors. Certain complex options strategies carry additional risk. Before trading options, please read Characteristics and Risks of Standardized Options. and call 800-343-3548 to be approved for options trading. Supporting documentation for any claims, if applicable, will be furnished upon request.

Basic definitions (call, put, strike price, etc).

Auction process.

Short selling.

Price action.

Supply & demand dynamics.

Sang Lucci’s watchlist.

How you read an options chain.

Sang Lucci’s equation for pricing an option.

The underlying stock.

Time decay.

Volatility.

Puts vs. short-selling.

In the money vs. out of the money.

Options classes: Weeklies & monthlies.

Calculating profit vs. loss potential.

How to choose and use a trading platform.

Bonus: Trading psychology crashcourse.

…much, much more!

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Frans de Weert is mathematician by training who is currently working as an equity derivatives trader at Barclays Capital, New York. After obtaining his masters in Mathematics, specializing in probability theory and financial mathematics at the University of Utrecht, he went on to do a research degree, M. Phil, in probability theory at the University of Manchester. After his academic career he started working as trader for Barclays Capital in London. In this role he gained experience in trading many different derivative products on European and American equities. After two and half years in London, he moved to New York to start trading derivatives on both Latin American as well as US underlyings. Frans de Weert lives in New York city.

Innehеllsfцrteckning

Preface. Acknowledgements. Introduction 1. OPTIONS. 1.1 Examples. 1.2 American versus European options. 1.3 Terminology. 1.4 Early exercise of American options. 1.5 Payoffs. 1.6 Put-call Parity. 2. THE BLACK-SCHOLES FORMULA. 2.1 Volatility and the Black-Scholes formula. 2.2 Interest rate and the Black-Scholes formula. 2.3 Pricing American options. 3. DIVIDENDS AND THEIR EFFECT ON OPTIONS. 3.1 Forwards. 3.2 Pricing of stock options including dividends. 3.3 Pricing options in terms of the forward. 3.4 Dividend risk for options. 3.5 Synthetics. 4. IMPLIED VOLATILITY. 4.1 Example. 4.2 Strategy and implied volatility. 5. DELTA. 5.1 Delta hedging. 5.2 The most dividend sensitive options. 5.3 Exercise-ready American calls in dividend paying stocks. 6. THREE OTHER GREEKS. 6.1 Gamma. 6.2 Theta. 6.3 Vega. 7. THE PROFIT OF OPTION TRADERS. 7.1 Dynamic hedging of a long call option. 7.2 Dynamic hedging of a short call option. 7.3 Profit formula for dynamic formula. 7.4 The relationship between dynamic hedging and q. 7.5 The relationship between dynamic hedging and q when the interest rate is Strictly positive. 7.6 Conclusion. 8. OPTION GREEKS IN PRACTICE. 8.1 Interaction between Gamma and Vega. 8.2 The importance of the direction of the underlying share to the option Greeks. 8.3 Pin risk for short dated options. 8.4 The riskiest options to go short. 9. SKEW. 19.1 What is skew? 9.2 Reason for skew. 9.3 Reason for higher volatilities in falling markets. 10. SEVERAL OPTION STRATEGIES. 10.1 Call spread. 10.2 Put spread. 10.3 Collar. 10.4 Straddle. 10.5 Strangle. 11. DIFFERENT OPTION STRATEGIES AND WHY INVESTORS EXECUTE THEM. 11.1 The portfolio manager's approach to options. 11.2 Options and Corporates with cross-holdings. 11.3 Options in case of a takeover. 11.4 Risk reversals for insurance companies. 11.5 Pre-paid forwards. 11.6 Employee incentive schemes. 11.7 Share Buy-backs. 12. TWO EXOTIC OPTIONS. 12.1 The quanto option. 12.2 The composite option. 13. REPO. 13.1 A repo example. 13.2 Repo in case of a takeover. 13.3 Repo and its effect on options. 13.4 Takeover in cash and its effect on the forward. Appendix A: Probability that an option expires in the money. Appendix B: Variance of a composite option. Bibliography. Index.

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Introduction to Binary Options Trading

Market enthusiasts around the world are referring to binary options as a revolutionary form of trading. Its cutting-edge qualities are breaking barriers for investors within each avenue of the financial arena.

Minimal risk, online accessibility, varying assets, and zero commission fees are just a few reasons why binary options trading is capturing the attention of both new and experienced traders alike.

This introduction will focus on understanding the basics of binary options and serve as an introduction to our guide which will provide an abundance of facts, strategies, and tips for all intrigued traders.

What are Binary Options?

Binary options, also referred to as digital options, are contracts to options where the payout of the underlying asset is fixed and exceeds the predetermined strike price within a given time frame without the obligation of purchasing the asset. The payout of the option is not dependent on the range by which the price of the underlying asset moves.

In layman’s terms, binary options allow a person to trade an underlying asset and not invest in the asset itself and the traded asset possesses a predetermined payout percentage.

In order to collect the payout percentage, or be “in the money”, the trader must predict whether or not the traded asset will rise or fall against the current price within a specific period of time. The price is the price of the underlying asset at the exact time of the trade. It does not matter how large or small your prediction is against the price, as long as it is correct, payout percentage is yours.

Three Simple Steps

One of the reasons trading binary options is growing so quickly in popularity is because of its simplicity. With little research of market status and a basic understanding of binary options, making a profitable trade is highly conceivable. Let’s take a look at the types of options and the steps needed to place a trade.

There are two choices for every trade: CALL and PUT . A call (up) option means that you think that the price of the chosen of the asset will rise above the current price within a specified period of time. A put (down) option means that the price of the chosen underlying asset will fall below the strike price within a specified period of time.

Binary options also have various expiry (closing) times which give you a choice. For example, you can choose the asset in which you decide to invest to expire in 15 minutes, 30 minutes, one hour, intraday, weekly, biweekly, or even monthly. Ranging ending times gives the investor a heightened sense of control in the role of returns and allows you to easily employee simple high profit trading strategies.

The information provided thus far is all you need to enter the market of binary options.

In just three simple steps and just a few minutes of your spare time, you are able to make major earnings. Let’s take a look at the steps:

You determine which asset you wish to invest in.

You decide if this asset is going to go UP or DOWN .

You decide if this will happen now or later.

It is just that simple… There is only one last decision and that is how much you wish to invest. There are no hidden risk, no fees and no exposures, when you enter your trade you know you profit, and risk.

So there you have it; the basics to trading binary options. When trading, it is always important to remember to keep up with the market. You don’t need to be a professional and spend hours in front of CNBC or read each article in the Wall Street Journal, but it is crucial to stay updates with world headlines. Being updated with market status will guide you in the appropriate directions in which will minimize your risk and in which will earn you the most profits.

Binary options’ trading is one of the most simplified methods of trading that gives you flexibility and control. With fixed odds returns, structured reward and risk ratios, and variability of underlying assets, it is no wonder why this platform of trading is turning into a worldwide financial phenomenon.

Traders of Binary Options

Binary options are exotic options in which are traded via private sectors. These short term investments offer high rates of return and are traded by both inexpert and experts alike. Binary options are straightforward and effortless; the trading concept is extremely easy to ascertain. Along with ease and simplicity is accessibility.

Binary options are available to trade 24 hours a day, 7 days a week making trading available to anyone wishing to start a new trading venture.

Binary option trading only recently became available to individual investors. In 2008, the Securities and Exchange Commission approved the listing of binary options with continuous quotations to individuals. Until 2008, binary option trading was only accessible via a broker or via a brokerage firm. A major barrier of entrance for those wishing to trade binary options was the cost associated with the third party.

Today, the option to use a broker or a brokerage firm is still available to individual investors but the need for the middle man has decreased immensely. Most individual investors involved with binary option trading use an online platform that does not charge a fee and is continuously accessible.

IvoryOption™ is the only online platform for trading binary options that provides exemplified customer service, continuous education, and unlimited transactions. Our account managers are experience professionals that provide guided material, one-on-one coaching, and scheduled webinars.

The coalition of a user–friendly and flexible platform along with guided expertise allows our investors to maximize earnings with minimal effort from the comfort of their own home.

Advantages of Trading Binary Options

Binary options are one of the newest and most interesting vehicles found today in options trading. With their simplicity, potential for large gains, and high turn-over, they have many distinct advantages over other types of options trading. Although conventional trading still has strengths in many situations, in many other cases binary options are simply the easier, more enjoyable form of options trading.

• Simplicity

The simplicity found in binary trading is perhaps the aspect which makes it most appealing over traditional options trading. Since every situation is either gain or loss, based solely on the direction the asset takes, investors need to pay much less attention to the details in this sort of options trading. To finish in-the-money, all a trader really needs to know is which direction the asset will move before the time of expiration.

• Entering a trade

The ease of entering a trade is another benefit binary trading has over other forms of trading. Unlike traditional trading, binary option traders can set the price of the contract and can trade on assets that they might not be able to afford on the traditional market. This also makes it easier for traders to gauge and limit the amount of risk involved in the trade. Since traders are purchasing a contract for a set price, they know exactly how much they will gain or lose should the asset finish in-the-money or out-of-the-money. This built-in risk management gives binary option traders a peace of mind that other more traditional traders do not enjoy, and insures that binary option traders always know how much they can win and how much they can lose at all times.

• Unfettered

Binary options are relatively unfettered by regulation, making them an easy-to-access, highly-dynamic form of options trading. You can buy a binary option at any time of day or night, seven days a week. You can also purchase them from your own home, so long as you have an internet connection, and can use any number of services to get through them. And because of the low level of regulation, a much larger field of assets are offered through binary options than through traditional options trading. In the future this field is likely to expand even further, so that you can purchase contracts on assets far outside of the traditional trading realm.

• High Profits

Binary options have one of the highest rate of returns on the open market. Most forms of traditional stock options must mature over time in order to redeem possible earnings; binary options have an average rate of return ranging from 75% to 81%.

• Short Term Investment Options

For many, investing can be an extremely stressful undertaking. The thought of exhausting income for a long-term payout is too difficult to manage. Traditional options can take years to mature while binary options are relatively short-term with extreme flexibility. Trading binary options allow the investor to experience a sense of control. At IvoryOption™, the investor has the option to make at trade with expiry rates ranging from fifteen minutes to one month. This litheness permits the investor to yield acute earnings in a matter of minutes.

• Low Capital Investment

For investors that wish to begin trading at an undersized amount, IvoryOption™ offers clients minimal trades of $10. This feature allows traders to get familiar with the platform and also gain trading experience at minimal levels.

• Protection Against Volatility

Binary options provide an unequivocal advantage against volatile markets. Because binary options provide fixed rates of return and because trades are not actually capitalized in the underlying asset, volatile markets only provide opportunity rather than detriment.

• Just One Pip

Unlike traditional options and the profit dependence of the difference between strike price and sell price, binary options do not require any more than one pip to be “in the money”. With all of these advantages, it’s no wonder that binary trading is such a rapidly expanding type of options trading. From the newcomer to the well-seasoned investor, binary option trading offers something for everyone; high profits with minimal risk in a short period of time. To explain it simply the asset simply has to move in the direction you selected.

The Basics

Binary options are once again an uncomplicated form of trading. In order to grasp the concept of binary options trading, three key notions must be comprehended:

1. The Underlying Asset

This is the first component to any trade; choosing an asset. At IvoryOption™, over 100 underlying assets are available to clients. The assets are drawn from stocks, indices, foreign exchange, and commodities. Many traders focus on one asset or one sector or a compilation of many sectors. IvoryOption™ gives the client flexibility and control with its vast array of options.

2. The Expiry

Once an underlying asset is chosen, the contract for the option must be executed. At IvoryOption™, once again, flexibility is offered to its clientele. Contracts are offered with expiry rates ranging from fifteen minutes to thirty minutes to one hour to end of day to one week and to even one month. You, the client, can purchase a contract up to five minutes before expiration, allowing you to grab a hold of any trend.

3. The Prediction

Finally, the prediction of the underlying asset is made. Depending on market data and other information used in guiding your prediction, a call option or a put option is determined. If you think an underlying asset will rise above the strike price, or the price of the asset at which the contract is executed, then a call option is placed. If you think the asset will fall below the strike price, a put option is placed. If the prediction is correct, your earnings will range from 75% to 81%, which is approximately double the initial investment.

Introduction to Options - Strategies For Consistent Profits

Описание курса

We at Traders Insight have put together this comprehensive options course so you can to learn how to supercharge your trading and learn how to make money consistent profits every month.

At the end of this course, you will have all of the tools necessary to make 3-5% consistently selling options safely. You will also learn how to buy options to make massive gains, earning thousands of dollars in even one trade! You will be led, step-by-step, through basic options terminology, how options work, how to sell them, and most importantly, strategies that you can use right away to begin to make money.

You will also get an in depth look at the trading strategy that we used to make 67% ROI in 2017.

We want you to become apart of our trading community at traders insight. Our goal is to make you money and this course will be your guide. Once you complete the course, both Matt and I will be here to help and guide you to becoming an options master.

There is no other course like this! Take this course now!

Music in trailer is from Bensound

Каковы требования?

Basic understanding of how markets work

Что я вынесу из этого курса?

Более 55 лекций и 4.5 часов содержания!

Learn how to become a successful options trader.

Implement our proven trading strategy that netted 67% in 2017

Understand what options are and how to buy and sell them.

Implement tested options strategies on a day to day basis.

Understand how to setup ThinkorSwim for trading.

Какова целевая аудитория?

This course is meant for people who have a basic understand of stocks and want to supercharge their trading using options

This course is also for people who want to learn how to trade on probabilities, rather than luck or fundamentals.

Even if you have traded options before, this guide will teach you strategies you may not have known about.

Учебный план

I work as a professional options trader working for private clients. We use a short premium selling strategy selling Volatility.

I've been investigating what makes the world tick for my entire life. Money and philosophy are my two greatest passions. I've helped teach people around the world how to be successful in trading options and to take accountability with their life. I'm an avid reader of the classics, such as Plato, Aristotle, Nietzche and other major philosophers who have influenced modern though.

February 26, 2017

Want to Day Trade? Try Binary Options

Binary options are a type of exotic options and are called binary because there are only two possible outcomes at expiration: nothing or a fixed amount of money. Binary options are usually classified in two types: Cash-or-nothing options and asset-or-nothing options. (Find out how to start trading binary options with A Guide To Trading Binary Options In The U. S . )

Cash-or-nothing options pay off a predetermined fixed amount of cash, or nothing, depending on the price of the underlying asset relative to the exercise (strike) price. In a European cash-or-nothing call option, the holder receives cash at expiration if the underlying price is higher than the strike price at expiration of the option, but receives nothing if it’s lower. In an American cash-or-nothing call option, the holder receives a certain amount of cash if the underlying asset price ever reaches or exceeds the exercise price during the life of the option. In a European cash-or-nothing put option, the holder receives a certain amount of cash at expiration if the underlying price is lower than the strike price at expiration, while in an American cash-or-nothing put option, the holder receives certain amount of cash at expiration if the underlying price ever reaches or drops below the strike price during the life of the option.

European asset-or-nothing call and put options and American asset-or-nothing call and put options work exactly the same as their cash-or-nothing equivalents, except that the pay-off of this type of option is not a predetermined fixed amount of cash, but the price of the underlying asset.

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[Expert] Introduction To Option Trading

Options give a trader another dimension to speculate on the market. Used properly, they can be a very beneficial tool.

The first thing to know about options is what they are. An option gives the buyer the right to take an action on a particular security at a certain price within a certain time frame. These “rights” are homogenized and trade on exchanges, similar to the way stocks do.

Definitions – Some basic terms

The security that the buyer has the right to take action on is called the underlying . If you buy an option, you are long. If you sell an option, you are short . There are two sides to every option, the buyer and the seller. The seller has an obligation to fulfill the buyer’s right. Each side has entered into an agreement with the other. Therefore, we refer to an option as an option contract . You can buy and sell multiple contracts at once, the same way you can buy and sell multiple shares of a stock. The price that the option contracts are exchanged at is called a premium. The price of the underlying, that the option buyer has the right to buy or sell at is called the strike price. The date that the contract runs out on is called the expiration date. There are two types of options:

A call gives the owner the right to buy a security at a particular price. A put, gives the owner the right to sell a security at a particular price.

You can see the payoff of a long call and put below. The option value will be negative until the underlying is equal to the strike price. It then moves up in value. A call moves up in value as the underlying moves up in price, because you have the right to buy. A put moves up in value as the underlying moves down in price, because you have the right to sell. Both options loss is limited to the premium paid. They both have an unlimited amount of potential profit.

Leverage – What is leverage

As a rule, one option on a stock represents one hundred shares of the underlying stock. This is true of most options that trade on exchanges. If a stock is trading at $50 a share and a call option with a $50 strike price has a premium of $1. That option will cost you $100. Let’s say the stock rises to $55 a share and the option premium rises to $4, and you sell. You have made a profit of $300. Options are leveraged securities.

Leverage is controlling a large amount of a security (stock, bond, commodity etc..) with a small amount of principal. Your profits are amplified, but remember your losses will be too.

An Option Trade – Putting it all together

The image below is an example of an options order entry screen.

The underlying is the SPDR S&P 500 ETF. I am going to attempt to buy calls with an expiration date of August 21. The strike price is 211. I will be buying to open, which means I am initiating a position. If I was currently short the option and wanted to close out my position, I would buy to close. Conversely, if I want to initiate a short position, I would sell to open. If I want to close out a long position, I will sell to close. I am going to attempt to buy five contracts.

The types of orders available are the same as for stocks. I will make my limit order for 3.12, since there is an ask, or asking price, of 3.12 right now. This means I will not pay more than a 3.12 premium for each option contract. The ask of 3.12 indicates that the lowest sellers are are at 3.12. Therefore, it is likely, but not guaranteed, that my order will be executed. If I want, I could place my limit order below 3.12. However, the price would need to come down for my order to be executed. A market order will be executed at whatever price the market is at when the broker receives your trade. A stop order and stop limit orders are protective orders, that are placed above the market for buys and below the market for sells. A regular stop order becomes a market order when the option reaches the price you set. A stop limit becomes a limit order when the option reaches the price you set.

You can also make the order a day order or GTC, the same way you can with a stock order. I will make this order a day order, which means it will expire at the end of the day. A GTC is good until cancelled. This means the order stays active until I specifically say to cancel it. A GTC order can be active for multiple days.

All or none, means that the order will be executed all at once or not at all. If I select this, I will buy five contracts at my price or my order will not be executed at all. Since I selected “None”, I could end up having my order partially executed. For example the broker could end up buying only two contracts. Then the broker will attempt to buy the three other contracts at my limit price.

Those are the basics of options trading. Be sure to visit our website OptionStrategies. info or their Twitter feed to stay up-to-date, to learn more about options trading and develop some trading ideas.

Option noob here. You mentioned in the beginning that if you buy an option, you are long. Just clarifying though, that if you buy a put option, you’re basically short right?

Also, another clarification. You mentioned: “If a stock is trading at $50 a share and a call option with a $50 strike price has a premium of $1. That option will cost you $125.”

Should that cost $100 if an option contract is 100 shares?

In regards to your first question, if you buy a put you are long the put. Being long the put gives you the right to sell the underlying at the specified price within a certain time frame. If you exercise that right then you will be short the underlying. I explain in more detail here: http://www. optionstrategies. info/bearish-spread/long-put

You are correct about one call option costing $100 if it is trading at $1. That was a typo on my part. Sorry if it caused any confusion. Thank you for catching that and for your other question. I hope the answer helps.

You are here: Home / Strategies / Options / Options on Futures: An Introduction to Buying Options

Options on Futures: An Introduction to Buying Options

This post originally appeared in FutureSource’s Fast Break Newsletter, where Drew Wilkins is a regular contributor on various futures trading topics.

Understanding the Strike Price

Out of the Money Options – Out of the money call (put) options involve strike prices that are purchased above (below) where the underlying market is currently trading.

At the Money Options – At the money call and put options are strike prices that are purchased where the underlying market is currently trading.

In the Money Options – In the money call (put) options are strike prices that are purchased below (above) where the underlying market is currently trading.

See the following screenshot for February Gold taken from our Vantage trading platform. Register for a complimentary demo of Vantage .

Exercising a Purchased Option

Understanding Intrinsic Value and Time Value

Offsetting an Option Position

Another Example in the Gold Market

Options on Futures Contracts: A Trading Strategy Guide

Sign up now and discover how to structure your trades for maximum profit potential. Using futures and futures options, whether separately or in combination, can offer countless trading opportunities.

Risk Disclosure

WHEN INVESTING IN THE PURCHASING OF OPTIONS, YOU MAY LOSE ALL OF THE MONEY YOU INVESTED.

This material is conveyed as a solicitation for entering into a derivatives transaction.

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This material is conveyed as a solicitation for entering into a derivatives transaction.

Introduction to Binary Options Trading

Minimal risk, online accessibility, varying assets, and zero commission fees are just a few reasons why binary options trading is capturing the attention of both new and experienced traders alike.

What are Binary Options?

In layman’s terms, binary options allow a person to trade an underlying asset and not invest in the asset itself and the traded asset possesses a predetermined payout percentage.

Three Simple Steps

The information provided thus far is all you need to enter the market of binary options.

In just three simple steps and just a few minutes of your spare time, you are able to make major earnings. Let’s take a look at the steps:

You determine which asset you wish to invest in.

You decide if this asset is going to go UP or DOWN .

You decide if this will happen now or later.

Traders of Binary Options

Binary options are available to trade 24 hours a day, 7 days a week making trading available to anyone wishing to start a new trading venture.

72-Option™ is the only online platform for trading binary options that provides exemplified customer service, continuous education, and unlimited transactions. Our account managers are experience professionals that provide guided material, one-on-one coaching, and scheduled webinars.

The coalition of a user–friendly and flexible platform along with guided expertise allows our investors to maximize earnings with minimal effort from the comfort of their own home.

Advantages of Trading Binary Options

• Simplicity

• Entering a trade

• Unfettered

• High Profits

• Short Term Investment Options

For many, investing can be an extremely stressful undertaking. The thought of exhausting income for a long-term payout is too difficult to manage. Traditional options can take years to mature while binary options are relatively short-term with extreme flexibility. Trading binary options allow the investor to experience a sense of control. At 72-Option™, the investor has the option to make at trade with expiry rates ranging from fifteen minutes to one month. This litheness permits the investor to yield acute earnings in a matter of minutes.

• Low Capital Investment

For investors that wish to begin trading at an undersized amount, 72-Option™ offers clients minimal trades of $10. This feature allows traders to get familiar with the platform and also gain trading experience at minimal levels.

• Protection Against Volatility

• Just One Pip

The Basics

Binary options are once again an uncomplicated form of trading. In order to grasp the concept of binary options trading, three key notions must be comprehended:

1. The Underlying Asset

This is the first component to any trade; choosing an asset. At 72-Option™, over 100 underlying assets are available to clients. The assets are drawn from stocks, indices, foreign exchange, and commodities. Many traders focus on one asset or one sector or a compilation of many sectors. 72-Option™ gives the client flexibility and control with its vast array of options.

2. The Expiry

Once an underlying asset is chosen, the contract for the option must be executed. At 72-Option™, once again, flexibility is offered to its clientele. Contracts are offered with expiry rates ranging from fifteen minutes to thirty minutes to one hour to end of day to one week and to even one month. You, the client, can purchase a contract up to five minutes before expiration, allowing you to grab a hold of any trend.

3. The Prediction

72-Option™ is a brand of Aiel LTD with billing services provided by Amadicia LTD 1 Whitehall Quay, Whitehall Rd. LS1 4HR Leeds, UK.

Risk disclosure: Remember that trading on financial markets, such as forex, stock, derivative and commodities exchanges, carries a high level of risk and is not suitable for all investors. When using a leverage, there is a possibility of losing funds, exceeding your initial investment. Therefore, you should not risk more than you can afford to lose. Before deciding to trade, you should be fully aware of your exposure to risk. If you do not fully understand and acknowledge the above, you should seek the advice of independent consultants.

Notice: It is against the law to solicit U. S. persons to buy and sell commodity options, even if they are called ‘prediction’ contracts, unless they are listed for trading and traded on a CFTC-registered exchange or unless legally exempt.

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Education Center

Trading binary options at OneTwoTrade is very simple. Regardless of your background and your knowledge of the financial markets, you can make exceptional profits.

When trading SmartOptions, keep these four basic components of binary options in mind.

The asset refers to anything that is traded on a global market. An asset could be anything from shares in a company such as Microsoft or Google, to commodities, such as coffee or oil. OneTwoTrade enables you to buy SmartOptions for just about any asset you can find, but we typically have SmartOptions available for the most common or popular assets.

The direction, which is labeled as “will finish”, is your prediction as to how the asset’s price will finish at the selected expiry time. You buy an Up Option if you believe the price will close higher than the current price, and vice versa, if you believe the price will close lower than the current price.

The Expiry Time

The expiry time is a critical component of the SmartOption. The expiry time is the point where the SmartOption ends and your position is deemed successful or not. OneTwoTrade allows you to choose from a range of expiry times, but most commonly, we feature expiries every 30 minutes. SmartOptions can be bought up until ten minutes before expiry, excluding 60 second options.

You can trade anything from £10 to £1500 depending on how much risk you want to take, or how big of a payout you would like to receive.

Trading is engaging in the financial markets that seek to outperform traditional buy-hold-sell trading opportunities. Rather than seeking profits from long-term growths in the markets, traders look for short-term price movements to book profit in both rising and falling markets.

One of the most innovative and popular formats of short-term trading is called Binary Options. Trading with these options is called Binary because there are only two possible outcomes to the trade.

Binary Options is an innovative trading model that gives you the opportunity to make higher returns in a very short period of time. Trading with Binary Options is making a simple prediction as to whether or not the price of an asset will rise or fall – you are credited your returns instantly once the trade expires.

Because Binary Options are traded online, all you need is an Internet connection and a trading account. Once you make the deposit on the platform, you are just a click away from trading.

Once you select an asset to place a trade on, you will have two trading options to choose from: You can either CALL or PUT an asset. Then, confirm your action and your option is live. That's it! The trade will expire at the time you chose and then you'll get credit on your returns.

Unlike a number of other trading formats, Binary Options are simple to trade. However, because assets are priced in real time through active bidding, there are specific techniques known as Call and Put.

By forecasting the trend of the asset and anticipating the rise or fall of the asset's price, you can beat the market and earn up to 85% returns on your trades.

OneTwoTrade offers unparalleled support on every step of your trade by featuring daily market reviews and analysis so that you can always be a step ahead. We have the right tools and an in-depth knowledge library to walk you through the basics of trading on Binary Options.

Binary Options are the simplest way to take advantage of short-term market movements.

Open your free account and start trading today.

Trading with Binary Options is fundamentally making a simple prediction as to whether or not the price of an asset will rise or fall.

To trade you will need to buy one of the two options. Your first option is called a “Call" which you can buy when you expect the price of that asset to go up. However, if you predict that the price of that asset will fall, then you buy a “Put" option.

With each trade, there are two key pieces of information to remember. First is the “Strike Price." This is the current rate of the asset, which will determine whether your trade expires in the money or out of the money. Second is the date and time of expiry. With Binary Options, expiration can be as short as 60 seconds or as long as a month.

For example: At 2:00 p. m. the EUR/USD rate is 1.3200 and you predict this asset will close above 1.3200 within the next hour (i. e. at 3:00 p. m.) All you need to do is choose the expiry time, (in this case it will be 3:00 p. m.) and the amount you would like to invest and click “Call.” The “Strike Rate” for this asset will be 1.3200, and if your prediction comes right and the asset closes at 1.3201 at 3:00 p. m. you win the trade and your investment plus profit will reflect in your account instantly.

Let's have a look at the most popular Binary Option Lingos.

Call: You choose Call when you predict that the price of the asset will rise higher than the present rate.

Put: You choose Put when you predict that the price of the asset will fall below the present rate.

Strike Rate: This is the rate at which you buy a “Call/Put” the option. This rate will determine the success and failure of your trade.

Current Rate: This indicates the asset's real time rate. Upon expiry, the system will compare the current rate to the strike rate in order to determine whether your trade was successful or not.

Expiry Time: This is the date and time you choose for the expiration of the asset you want to trade.

In The Money: This means success. If your option was successful at time of expiry, it is know as ending In The Money. For example, if you bought a Call option and the current rate is higher than the strike rate at time of expiry, your option will end In The Money.

Out Of The Money: This means that you missed out on your position. If the current rate ends opposite to what you predicted at time of expiry, your trade is termed Out Of Money.

At The Money: If the current rate is equal to the strike rate at time of expiry, your trade will be deemed At The Money. When this occurs, you investment is credited back to your account.

With OneTwoTrade, you can trade on top assets from across the global markets.

These are the four most popular Binary Option Assets available to trade with: currencies, commodities, indices, and stocks.

Currencies cover all the top currency pairs such as EUR/USD, JPY/USD, EUR/GBP, etc. We have the top 12 Forex pairs you can trade on 24/5.

Indices lists the top indices in the world, such as NASDAQ, DAX, DOW, FTSE, S&P. We have a total of 15 indices available from North America, Europe, and Asia.

Stocks encapsulate top stocks from across all markets, such as APPLE, GOOGLE, FACEBOOK, MASTERCARD, AMAZON, TOTAL, RIO TINTO, etc. summing up to 45 top blue chip stocks.

Commodities cover the top commodities such as gold, silver, oil, coffee, and platinum.

If you previously traded Forex or its more volatile cousins, crude oil or spot metals (such as gold or silver), you probably learned one thing: these markets carry a lot of risk and it is very easy to blow off the market. Traders have to battle a variety of parameters that affect trade outcomes. Leverage, margin, news events, slippages and price re-quotes are factors that can affect trade negatively. This is why trading the currency and commodities markets is a very risky venture. With binaries, there is no leverage to contend with and phenomena such as slippage and price re-quotes have no effect on Binary Option trade outcomes.

Futures, Forex, commodities and classical options are always traded with some costs; you will either pay them through a bigger spread or through separated commissions. In certain markets, you will also have to pay for the data feed and in certain cases, you also pay for the trading platform. All this lowers your profit which is something you must take into account.

With Binary Options, you have no commissions or other fees. In terms of profits and losses, what you see is what you get. The trading platform and data are free, as well as your trading, which is free of commissions and any other fees.

OneTwoTrade created an accessible platform offering conversational web-based trading via your desktop, laptop, tablet or mobile. This means you can trade on the go, making it easy for you to check your options on a regular basis. In addition, assets are traded internationally, which means that at least one market somewhere around the world will be open, making Binary Options trading at OneTwoTrade a 24/7 affair.

This website is marketed in the EU by Up & Down Marketing Limited of Cobalt House, Level 2, Notabile Road, Mriehel, Birkirkara BKR 3000 Malta, licensed and regulated by the Malta Gaming Authority in Malta, license number MGA/CL2/744/2011 in effect from the 13th October 2011.

OneTwoTrade provides a platform for SmartOption trading which embraces both simplicity and sophistication. OneTwoTrade has distilled the most complex aspects of market trading into a OneTwoTrade SmartOption, while promoting the vigilant monitoring of markets by clients before any position is made. Customers are advised to exercise caution when betting in SmartOptions and not to bet beyond their current financial means. OneTwoTrade accepts no liability for individual or corporate customer trades. All trademarks, service marks and/or trade names used in this site are trademarks and/or registered trademarks and logos of Up and Down Marketing Limited.

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Synopsis: The CBOE's top options trainer, James Bittman, introduces first-timers and fledgling traders to the exciting options arena. Bittman explains in concise, step-by-step terms exactly how options work, providing clear explanations and examples of the most common - and valuable - option strategies. You'll discover how to develop a solid options trading plan - and tailor it to your own goals and risk limitations. Learn what it takes to start trading options profitably with the critical "two D's" -- discipline and decision making. Other revealing insights include the 3 key steps to any successful options investment and learning to "think" like an options investor. With Bittman's basic strategies, this comprehensive video-and its complete online support materials - your entry into the options market will be far more focused and effective.

Jacket Description: An Introduction to Option Trading Success with James Bittman Thinking of testing the waters in options, but haven't yet taken the plunge? Eliminate your fears and jump in with the CBOE's top options trainer, James Bittman, as he introduces first-timers and fledgling traders to the exciting options arena. Bittman explains in concise, step-by-step terms exactly how options work, providing clear explanations and examples of the most common - and valuable - option strategies. This thorough presentation covers all the options basics you need to get started on a successful trading path. You'll discover how to develop a solid options trading plan - and tailor it to your own goals and risk limitations. Traders and longer-term investors alike will find an excellent overview of what it takes to start trading options profitably, including. - 3 key steps to any successful options investment - Learning to "think" like an options investor - Using options to "invest" - rather than for pure speculation - Understanding "delta" and its affect on option pricing - Planning ahead: Preparing an exit strategy for every trade - The primary principles of time decay - The importance of taking a loss when your strategy goes bad Bittman also reveals the critical "two D's" to options trading success-discipline and decision making. With Bittman's basic strategies, this comprehensive video-and its complete online support materials - your entry into the options market will be far more focused, effective and, ultimately, triumphant.

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Introduction to Binary Options

Binary options is a relatively new way to trade within the financial markets. This type of trading was legalized in 2008 and its simplicity has attracted traders of different ages and personalities. What makes this unique from other forms of trading is that will not be taking ownership of any assets and instead, you will be guessing its future price or market value. In simple words, you are basically guessing whether its price will be higher or lower than its current price.

There are only two possible outcomes with a binary option:

In the money – when your guess about the price movement or direction is correct.

Out of the money – when your guess about the price movement or direction is incorrect.

With binary options, you can get considerably high returns in such a short period of time as long as your trades go in the money. And in the event that your trade goes out of the money, some brokers will still give you back a portion of what you initially invested so you’re not losing all that money you spent on an option.

With binary options, you will be trading on commodities, stocks, indices and currencies (forex). These are called underlying assets since the price of the option are taken from their actual market price. As the trader, you will be guessing whether an underlying asset’s price will be higher or lower than its opening price when it reaches the expiration time. Basically, you only have two choices:

Call (or High) – you speculate that the underlying asset’s price will be higher than its current market price when it reaches expiration.

Put (or Low) – you speculate that the underlying asset’s price will be lower than its current market price when it reaches expiration.

If your guess is correct then you win the trade and you will receive the agreed payout.

Here’s an example to make things clearer

Let’s say you want to trade on BMW’s stock price. If you speculate that BMW’s market price will be higher than its current price of 91.8700 after at 21:45 then you need to invest on a Call (High) option.

If BMW’s stock price reaches even 1 point higher than the previous price upon expiration then your option is in the money and you win the trade. Such trade can give you a profit of around 85% on a single trade on Call/Put (High/Low) options. In the example above, the potential return is $17.30 or 73% of your $10 investment. If the result is the other way around then your option is out of the money. Depending on your broker, you will either lose all the money you invested on that option or you will get back a portion of it which is usually around 15% of the amount you invested. In the example above, there is no refund if your selected option is incorrect.

So why should I trade binary options?

It is important to remember that binary options are based on speculation which means that winning is probable but not assured. However, this type of trading boldly enhances the elements of speculation thanks to the availability of various tools and resources that you can use in trading binary options in order to make an accurate speculation.

The bottom line here is that you are not required to be an expert in trading for you to enter in binary options trading but a certain degree of knowledge can already help you in making successful trades. At the outset, binary options only necessitate a considerably small amount of investment but the returns are already reasonable and you are already aware of such returns even before you started the trade.

With the help of online trading platforms, anyone can now trade from any location and get real-time information that is needed for making such trades. By making small but smart and losing a few insignificant investments, you could still generate considerable profits within a short period of time. And with the booming industry of binary options, brokers continue to improve their services and offer more far more advanced features for your benefit as a trader.

An Introduction To Pair Options Trading

One of the latest financial trading instruments used in speculative trading is referred to as pair options trading. This form of trading is defined as the practice of predicting the stock options that are expected to perform better than all the others. A trader who picks the winning pair of stocks basically makes a good profit. There are various different types of pair options trading. There is a fixed trading option and a floating pair option. A fixed pair can bring a return of about 86 per cent while a floating type may fetch a return of 350%+. That is an incredible return.

Pairs Trade Definition | Investopedia

Definition of 'Pairs Trade'. The strategy of. Investopedia explains 'Pairs Trade'. Find the middle ground between conservative and high-risk option strategies.

These par options are a variation of the better known and more popular binary options. The good news is that pay rates are always known in advance so a trader may choose their pair options as they see fit. It is possible to review risk versus rewards. Investors interested in the attractive returns posed by these types of trades will need to consult a main pair options broker so they may advice them on these trades and provide intimate knowledge regarding the Stockpair. the high risks and possible high returns of such a trade. Another possible stock exchange trader who can trade on behalf of investors and clients is a binary options broker .

Pair Options are a category of financial investments that traders use to profit from market movements. If the market moves in the direction the trader has forecast.

Fixed pairs options can be said to be the basic pair options. These options are normalized at the time of purchase which implies that their previous performance prior to purchase will not matter and is not taken into account. On the other hand, floating pairs options the previous performance over a certain period is going to determine the outcome of the trade on these pairs. The time periods involved here are days, weeks and months.

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Spread Trading: An Introduction to Trading Options in Nine Simple Steps

A proven, easy-to-understandmethod for makingmoney with options "If you've never invested in the stock market, this is the book for you. If you've been investingfor years. this is still the book for you. A fantastic introduction to options." --Jon "DOCTOR J" Najarian, Co-founder, OptionMonster. com Spread trading-the practice of combining optiontrades and adjusting them over time-is being used successfullyby more and more professional traders. In this book, Greg Jensenshows nonprofessionals the tremendous advantages thissafe and profitable method offers. In simple and precise terms, "Spread Trading" providesreaders with all the essential tools to begin trading options. It explains, in nine simple steps, the basics of puts, calls, strike prices, and spreads-assuming no prior knowledge onyour part-and tells how to profit no matter what the market does. The author has helped thousands of people achieve successimplementing this approach, and with Spread Trading, hecontinues to educate individuals on the benefits of trading thisway, showing you how to make money while reducing risk. Building his lessons around the entertaining story oftwo ordinary guys figuring out how to trade options with each other, Jensen offers more than dry formulas-he relates the sense andthe intuition of trading options in a way that is simple, methodical, and easy to follow. Read Less

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Introduction to Options Trading – Part 1 (PUTS)

I had a few people ask about an introduction to options. In this introduction to options I will go over some of the basics and talk about the options strategy I use the most, selling puts. In a rising market It can feel like you are “printing money.” I will also talk about how to buy a put and why you would want to.

I am certainly no expert on options trading but I have done really well so far. I’ve earned $3486 so far this year and have kept no more than $13,000 in my options trading account. You can see all of my options trades on my options tab. I don’t know if it has been mostly luck but hopefully I will be able to give some advice or tips from what I have learned over the last 1 1/2 years.

Before I begin, I previously posted my 2012 year-end options results here. This covers some of the basics and also a lot of the tax implications of options.

So what are options? From Wikipedia:

An option is “a promise which meets the requirements for a formation of a contract and limits the promisor’s power to envoke an offer.”

Options typically exist in one of two forms:

Put Options – A put option gives the holder the right to sell a specific stock at a set price, the “strike price”. on or before a specified date.

Call Options – A call option gives the holder the right to buy a specific stock at a set price on or before a specific date.

Additional options terminology you should know before we continue:

Strike Price – The strike price is a fixed price at which the owner of this option may buy or sell said security.

Premium – This is the income received by buying or selling an options contract(s).

Expiration Date – This is the last day that the options contract is valid.

Example of selling a put:

Let’s use Coca-Cola (KO) as an example. As of this writing, KO shares are currently trading at $39.46/share. I really like KO stock and want to buy more but I believe that Coca-Cola may be slightly overvalued. However, I determine that I’m willing to purchase KO shares on for $37/share or less. Well I could sell an option contract in order to “try” to buy more KO stock at this cheaper price. Worst case is that KO’s price doesn’t drop and I get to keep the premium.

I decided to look about 5-6 months out in time. Below you can see the Jan 18 ’14 KO Puts around $40 strike. Since I’m selling a put, the bid price is the price I’m going to get paid to sell this put option. Keep in mind that the longer amount of time I’m willing to wait, the higher the premium is.

So what Strike Price will give me a chance to purchase KO for under $37/share. For sake of this example we won’t be counting commission costs. So the way you figure your cost basis is to take the Strike Price and subtract the Bid price. So for the $40 Strike I would subtract $2.17 and come up with $37.83. This is higher than I want to pay so let’s take a look at the $37.50 Strike. If I sell 1 $37.50 KO Jan 18 ’14 Put right now then I would receive $1.05 x 100 = $105. Keep in mind that 1 put is equal to a 100 share lot so you multiply the bid/ask by 100 to figure out your premiums. So if these 100 shares of KO got assigned then my cost basis would be $37.50-$1.05 = $36.45/share. If KO is trading above $37.50/share around Jan 18 ’14 then I would get to keep the $105 for waiting.

To me, selling puts against sold blue chip companies is a win-win. I’m not worried KO is going out of business. I currently own shares and would like to build a bigger position. The key is trying to buy shares without over-paying. In this example, by waiting 5 months, you are given a chance to own additional shares of KO at a cost of $36.45/share or a 7.6% discount to where KO is currently trading.

Let’s assume I bought the put instead of sold it in my previous example. My break-even (the point where the sloped part of the graph crosses the x-axis) in the above example would be $37.50 (the strike) – $1.06 (the premium paid per share) = $36.44. Any price above $37.50, I have limited my loss to the premium paid. Any price below $36.44/share, I will be making a profit.

Buying puts is a concept that I understand but have not done yet. You are hoping or expecting the stock price to drop between the purchase date and the expiration date. Your loss is only limited to the amount of premium you paid. However, your profit potential can be very high depending on how far the stock drops in price. If you had bought puts in bank stocks before the financial crisis then you could have gotten rich. You are buying the right to sell a particular stock at a pre-determined price. You can do this whether you own the stock or not. Using the example above, let’s assume I bought the $37.50 Jan 18 ’14 Put. It would cost me $1.06 (ask price) x 100 shares = $106. Basically if KO was trading below $37.50/share then I might want to exercise my right to sell 100 shares for $37.50/share. This trade protects my investment from dropping below $37.50 before the expiration date. If I didn’t own 100 shares of KO then I am basically just betting that KO stock will drop in price enough that I can sell the put back before expiration for more than the premium. As KO stock drops, the bid/ask price of this particular put will rise.

In order to sell options, you will have to apply for an options trading account with your broker. For E*Trade, in order to sell naked puts, I had to get approved for Level-3 options trading using a marginable account. This requires a little bit of prior options experience to get qualified for naked puts. However, most anyone should be approved for basic options trading using a cash account.

You will want to have $37.50 x 100 = $3750 in cash to secure the KO trade for a cash account. Once you get approved for marginal trading and naked put selling then you are able to leverage your money to make many more trades. For instance, this particular trade would only require me to have $750 in cash initially. As the price of KO goes up. the bid/ask price will go down. So if KO goes on a run then my margin maintenance requirement will also go down. However is KO shares drop then I will be required to hold a little more cash to secure this put. I will talk about maximizing your leverage in a future article.

Note: I actually made a real-life put trade with KO recently and have posted that here .

I hope this is helpful and I plan to write another article involving call options, using margin to leverage your trades and some advanced options strategies.

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Binary Option trading introduction

Prior to 2008, binary option trading was not widely available to individual investors. The access to this form of trading would have involved the inclusion of a binary options broker who would have demanded up to $500 up front as a hire fee.

Binary Option Trading Introduction

This acted as a substantial barrier to entry to most individual investors and therefore the popularity of binary option trading was limited. However, the introduction of binary options listings, initially by the Options Clearing Corporation, followed by the American Stock Exchange (AMEX) and Chicago Boards Options Exchange (CBOE) introduced binary options trading to the general public. This move allowed the possibility of online trading of the options and its popularity has grown exponentially amongst both new and veteran traders. This binary option system are traded over the counter and include a wide range of underlying assets. Binary options markets are open during market hours with some markets, including currency-based binary options, being open 24 hours per day 5 days a week .

Trading Guide for Binary Option

Binary options offer short-term investments which can be traded by both beginners and professional traders. Binary options are also highly accessible in that beginners can learn to trade in a few minutes, and advanced strategies can be employed which may enhance the probability of making consistent profits. Beginners can learn how to trade using the trading guides offered on Opteck. com; these include trading tutorials, eBooks, market analysis tools and trading strategies. Using these tools can help the trader to gain an understanding of risk management and maximize the opportunities for a high return on each investment.

Binary Option Trading Benefits

Many binary options traders prefer the flexibility offered by binary options as opposed to traditional option contracts. They can be traded over shorter expiry timeframes, ranging from one hour to one month and are also very simple to understand. Due to the fact that binary options have a predetermined payout level, prior to executing the trade the investors knows the precise value of both profits and potential losses from the start. For this reason they are called Fixed Return Options (FRO’s) and the simplicity of calculating this as a percentage of the investment stake also makes them highly attractive to investors. With the potential to gain 75-95% profit on each investment with no commissions, they have become a very popular trading vehicle.

Market Volatility

Binary options are not exposed to the volatility of price action that occurs in many markets. Therefore, the beginning of the day – when markets have a tendency to gap and price fluctuates wildly – will threaten the stop losses of many traders whose profit and loss is reflected by the value of the asset. Binary options, on the other hand, do not exhibit these fluctuations in value, as they are only concerned with the expiration of the option as either ‘in the money’ or ‘out of the money’. The actual degree to which this is either side of the strike price is irrelevant and both profits and losses are known outcomes from the start. Touch options, however, allow traders to take advantage of this volatility and operate in a similar way to traditional binary options in that a trader determines a price that will be touched prior to the options expiry. If an investor anticipates significant volatility, they can pinpoint a price touch target and still maintain predetermined payouts and losses guarantees. The potential for large percentage profits and the speed at which they can be achieved make binary options trading very popular alternatives to traditional market investments.

Binary Option Strategies

Binary options are different from traditional options contracts in several ways. They offer a more flexible and accessible way for investors to purchase options without having a fixed price. Investors of binary options can therefore determine the amount that they wish to commit to purchasing the option. Binary options also allow investors to predetermine their level of profit and loss prior to purchasing the option. This predetermined payout level is a percentage of the initial investment used to purchase the option. Similarly, the potential losses are predetermined and will result in a loss of the initial investment less the protection rate which is often around 15%. Therefore, When a binary option expires ‘out of the money’ the client can maintain around 15% of the investment position credited back to their account once the trade expires. The expiration time on binary options can also be much shorter than traditional options, allowing an investor to purchase an option which may expire in a shorter time period such as 5 minutes, or up to one month in the future. Binary options expire at intervals during the course of the day and this makes them particularly attractive for short term traders.

Binary Option Trading Software

Binary options are trading instruments which provide derived investment in underlying assets. The option contract is derived from the value of the underlying asset and therefore no ownership of the asset exists. Binary contracts have an expiry time and date when the contract will either be considered as ‘in the money’ or ‘out of the money’. This reflects whether the call or put option expires above or below the strike price. To which extent the binary option can be considered as ‘in’ or ‘out of the money’ is irrelevant to the predetermined level of profit and loss. An example of this is an investor who believes that, over the course of the day and after an inflated rise, the value of gold will fall to around 1588. The investor logs into her account with a view to executing a put option of $100 at 9:00 with an expiry time of 14:00. The payout level for this option is 120% with a current strike price of 1590. The investor executes the trade and at 14:00 the option expires with the price of gold at 1589 giving a successful payout of $120 on her $100 investment.

Binary options offer a fast, exciting and accessible way to trade financial markets. Although they are very simple to understand and their execution is also straightforward, Investors should stick to markets that they are familiar with in order to maximize their chances of making high returns in a short time frame. After choosing the underlying asset you wish to open the trade on, the next step would be to choose the time frame for the expiry. Then the next step would be to choose the direction of the option. If you are confident that the price will rise during this period, purchase a call/high option. If you believe that prices will fall, purchase a put/low option.

Binary Option Broker

If you’re looking for a highly rewarding trading platform which will allow you to diversify your trading then binary option trading system is an excellent choice. Surf to 24Option to learn more about binary option trading.

About Forex

Forex :These articles discuss currency trading as buying and selling currency on the Forex market, trading basics, tools and techniques, Foreign exchange, commonly known as ‘Forex’ or ‘FX’, is the exchange of one currency for another at an agreed exchange price on the over-the-counter (OTC) market. Forex is the world’s most traded market, with an average turnover in excess of US$4 trillion per day. To traders the Forex Market is more thrill than the highest and fastest rollercoaster. Are you in?

About Binary Options

Binary options trading is the latest and most profitable financial instrument. In finance, a binary option is a type of option in which the payoff can take only two possible outcomes, either some fixed monetary amount of some asset or nothing at all (in contrast to ordinary financial options that typically have a continuous spectrum of payoff). Los dos tipos principales de opciones binarias son la opción binaria de efectivo o nada y la opción binaria de activo o nada. Binary options are a simple way to trade price fluctuations in multiple global markets, but a trader needs to understand the risks and rewards of these often-misunderstood instruments.

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An introduction to options trading

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Options introduction

In finance, an option is a contract between a buyer and a seller that gives the buyer the right, but not the obligation, to buy or to sell a particular asset (the underlying asset) on or before the option's expiration time, at an agreed price, the strike price. In return for granting the option, the seller collects a payment (the premium ) from the buyer. A call option gives the buyer the right to buy the underlying asset and a put option gives the buyer of the option the right to sell the underlying asset. If the buyer chooses to exercise this right, the seller is obliged to sell or buy the asset at the agreed price. The buyer may choose not to exercise the right and let it expire. The underlying asset can be a piece of property, a security (stock or bond), or a derivative instrument, such as a futures contract.

The theoretical value of an option is evaluated according to several models. These models, which are developed by quantitative analysts, attempt to predict how the value of an option changes in response to changing conditions. Hence, the risks associated with granting, owning, or trading options may be quantified and managed with a greater degree of precision, perhaps, than with some other investments. Exchange-traded options form an important class of options which have standardized contract features and trade on public exchanges, facilitating trading among independent parties. Over-the-counter options are traded between private parties, often well-capitalized institutions that have negotiated separate trading and clearing arrangements with each other.

Another important class of options, particularly in the U. S. are employee stock options, which are awarded by a company to their employees as a form of incentive compensation. Other types of options exist in many financial contracts, for example real estate options are often used to assemble large parcels of land, and prepayment options are usually included in mortgage loans. However, many of the valuation and risk management principles apply across all financial options.

Options introduction Topic - Options

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Symbols and price and volume data shown here are for illustrative purposes only. Transcend Capital and/or its employees and/or officers may have positions in securities referenced herein, and may, as principal or agent, buy from or sell to clients. Account access, trade executions, and system response may be adversely affected by market conditions, quote delays, system performance, and other factors.

Any specific securities, or types of securities, used as examples are for demonstration purposes only. None of the information provided should be considered a recommendation or solicitation to invest in, or liquidate, a particular security or type of security.

Options carry a high level of risk and are not suitable for all investors. Please read the Options Disclosures Document Characteristics and Risks of Standardized Options before considering any option transaction

Certain requirements must be met to trade options at Transcend Capital. With long options, investors may lose 100% of funds invested. Multiple leg options strategies will involve multiple commissions. Spread trading must be done in a margin account. Please read the Options Disclosure Document titled Characteristics and Risks of Standardized Options before considering any option transaction.

Exchange, order-routing or other types of fees may increase or decrease the net cost of a particular trade. A listing of these fees can be found here ; other account-related fees may be found here.

Diversification and Asset Allocation strategies do not ensure a profit and cannot protect against losses in a declining market. While an investment in a specific sector may involve a greater degree of risk than an investment with greater diversification, strategies that include broadly diversified portfolios do not ensure a profit and do not protect against losses.

Additional advanced options education is available from the OIC.

Transcend Capital, LLC and JunoTrade Corporation are not legally affiliated.

&dupdo; 2017 JunoTrade Corporation | Buy Stocks

Introduction to Options Trading – an easy to follow guide

Apart from buying or shorting stocks, there are other ways of trading the underlying securities. A good trader is the one that expands his/her tool set. I will be describing options trading in this article. I will try to keep it as simple as possible so especially the new traders can benefit from it and start using it.

As the name suggest, an ‘option’ is a defined contract that grants the trader to buy or sell an underlying asset at a specific price on or before a certain date.

There are two types of options:

Call Option: This is the option to consider if you think the price of the security will be going up.

Put Option: This is the option to consider if you think the price of the security will be going down.

Please note that the standard stock options and ETF options expire on the third Friday of the month (hence the volume increase in the markets at this specific date). There are also around 80 stocks in the stock market that their options expire every week on Friday. These are referred as ‘weekly options’.

In options trading, the prices are quoted as per share amount. The minimum contract is always for 100 shares. So in example: if the option price is quoted at $5 the actual cost would be $5 x 100 shares = $500 (not including trading commissions).

Option contract example:

XYZ February 10 Call at $2.20

Lets analyse the option contract above:

XYZ . this is the underlying stook (100 shares / option)

February . this is the expiration month (3rd Friday of the month, the contract will expire)

10 . strike (exercise) price – so if the contract is exercised, the price for share you will pay is $10.

Call . this is the type of option. It can be either call (when you long) or put option (when you short). In this example we have a call option (so we are going long) and this enables us to buy the shares at the given price (in this particular example at $10).

2.20 . this is the ‘premium’ you will pay to be able to buy this stock at the given price of $10. So the premium you will be paying will be $2.20 x 100 shares = $220 for 100 stocks for this example.

Long call strategy

This is a bullish strategy with a expectation of higher price of the stock at the expiration date. So if you buy the stock at $10, the expectation is it will be higher at the expiration date of contract (i. e $13)

The good news is with this option contract, your maximum loss is limited to the premium paid for the option contract. That is it.

Theoretically the maximum gain is unlimited. So the price of the stock can go higher and higher. In real life, of course there will be a limit on how high the stock will go, but can be a very profitable trace for you (if it goes higher).

Let’s look at another example so everyone gets what I mean above:

Let’s say we are bullish on ABC corp and the stock is trading at $34.50 and we think it will go to $40 within the next 45 days before the expiration of an option contract. So in short, the stock is currently trading at $34.50 and our price target for the stock is $40 (within the next 45 days).

when we look at our trading system, theoretically, we shall see some option pricing listed similar to below:

Looking at the prices on our system, in this example, the premium for January $30 call is trading at a high premium, $40 call has no value but the best paying option for going long seems like January $35 call. So I can do the following option trade:

BUY 1 January 35 Call @ 1.25

as it can seen on the table below, any price $35 or below, there is no value in this option contract. The maximum loss will occur is only $1.25 (nothing more). But anything above $35 plus the premium we paid (35 + 1.25 = 36.25 is our breakeven point) is a profit.

The good news about option contracts is, you do not need to wait to sell (or cover) your position until after the expiration is reached. You can buy or sell anytime, if the price is going towards the direction you wanted in the first place then you can have a profitable exit within days (and sometimes even hours).

If you take the example above and reverse (if you are bearish instead of bullish and you think the price will go down) then you can go for the PUT option (instead of call option). The trade mechanics and profit/loss calculations will be identical.

Advantages and disadvantages of options trading

Leverage: if you are a disciplined trader, you can use the advantage of leveraging with options

Risk/reward: depending on the strategy, some option strategy will enable traders to have theoretical unlimited upside with defined and limited loss

Strategy plays: some strategies will allow traders to take advantage of volatility and time decay type of plays

Low capital requirements: you can do so much more with $1000 in options then with simply trading stocks with the same amount.

Lower liquidity: very low volumes of trading unless they are very popular underlying stocks. For smaller traders this is not much of a problem if they are only trading 10, 20 option contracts. But if you are trading over 100 contracts then it might be difficult to get out of the trade when you want with low liquidity.

Higher spreads / commissions: options tend to have higher spreads because of lack of liquidity as mentioned above. Options commissions are also generally higher than simply trading stocks.

Options are not available for all stocks: This is one of the biggest disadvantages. Not all penny stocks have options available to them.

I hope this gives you a good idea of what options are, how to do an option trade and the main benefits & disadvantages of options trading. If you like this and found it useful then please like it or comment on Twitter so I know, and according to that I will have a part 2 write up where I will discuss best option trading strategies and how to benefit from them.

Have a nice Sunday.

If you have finished reading this, you can read PART 2 HERE .

2 thoughts on “ Introduction to Options Trading – an easy to follow guide ”

An Introduction to Options Trading. Zip

Frans de Weert, "An Introduction to Options Trading" 2006 | ISBN-10: 0470029706 | 176 pages | PDF | 3 MB

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An Introduction to 24option

Online trading has recently gained immense mainstream popularity, especially binary options trading. It’s worth noting that for a trading career to succeed, it helps to register with a worthy broker. Today we will be reviewing a reliable and professional binary options broker, 24option.

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This broker offers traders an intuitive trading platform powered by TechFinancials. The trading platform is 100% web-based and embraces innovative technologies for fast trade executions. The platform is easy to navigate and offers a variety of trading options. A mobile version of the trading platform is also available, which enables traders to trade while on the go.

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This company offers a vast list of global assets to trade which includes currencies, stocks, indices and commodities. The assets can be traded with a number of trade options such as High/Low, Boundary, Short Term and One Touch, which are explained in our 24option Review 2017 article.

In addition, the options can be traded over flexible expiry times. The broker also offers competitive rates for “in the money” outcomes, where a trade can attract a payout as high as 89%.

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This broker is famed for offering attractive incentives and bonuses for new and existing traders. The award-winning broker has partnerships with Boris Becker, the former #1 tennis player in the world, as well as the renowned football clubs Juventus and Olympique Lyonnais. There are monthly trading competitions throughout the year and new traders are eligible to receive as much as a 100% bonus on their initial deposit. Also, we have to mention tremendous 24option Signals that help traders acquire additional earnings.

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An introduction to options trading

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Introduction to Options Selling

Options offer traders an unlimited number of strategies with various levels of risk and reward. Unfortunately, many retail traders are stuck in a long option only “rut” and may not be aware of the potential flexibility offered by alternative option strategies. There is certainly a time and a place for buying outright options, but in my opinion most circumstances seem to favor an alternate approach. I believe option selling to be one of the most attractive forms of trading but proper risk management techniques are a must as the risks are high.

Short Option Trading

I have witnessed beginning traders lured to the markets in droves looking to participate in long option strategies. Their attraction stems from the fact that option buyers are faced with the prospects of unlimited profit potential and limited risk in the amount of premium paid plus commissions and fees.

The hazard in this type of mindset is that although one’s losses are limited, it is highly likely that an option buyer will lose some or all of the value of the option. Several studies suggest that more options than not expire worthless, accordingly it seems logical that by simply selling options as opposed to buying them is a preferential strategy.

Contrary to what many might seem to be the case, it is possible to buy a call option and lose money even if the market goes up. This is due to time value erosion and decreases in volatility or demand for the instrument. On the other hand, the seller of that same call could be profitable despite the fact that the futures price increased assuming that time value and or volatility has eroded.

Unlike buying a call , selling a call option is a bearish strategy. Call option sellers believe that the market will decline in the opposite direction of the strike price or at least manage to stay below it.

I have found that it may be preferential for option sellers to initiate positions on a day in which the market is going against the soon to be position. In essence, Call options should ideally be sold during times of elevated market prices and thus elevated call premium. This could mean that the market is approaching the top of a trading range, or simply overbought. Selling against the trend may seem like account suicide, but it can often be justified by inflated premiums.

Short Call Option

Why you would use them?

If you believe that the market is going down, bearish

The strength of your belief determines what strike prices you should sell

Sell out-of-the-money options (higher strike prices) if you believe prices are not going up

Sell at-the-money options (at current price) if you strongly believe prices are not going up (this isn’t a recommended strategy due to the aggressive nature)

Profit Profile

The potential profit is limited to the premium collected minus commission and fees

Your reverse break even point at expiration equals strike price plus the premium collected

Reverse Break Even = Strike Price + Premium Collected – Commissions and Fees

The maximum profit occurs if the market is below the strike price at expiration

What is the Risk?

Exposes trader to unlimited risk; thus, these positions need to be watched closely

Your losses increase if the market rises faster than the time decay erodes the option value

The market trading above the reverse break even is equivalent to being short the futures contract

At expiration your losses increase by one point for each point market moves above the reverse breakeven point

This trade was recommended on The Stock Index Report written by myself and published daily by DeCarley Trading on August 8th. While the recommendation was aimed at those trading the full sized S&P, an e-mini trader could have executed a similar trade with less profit potential and less inherent risk.

The original recommendation called for traders to sell the September S&P 500 1390 call option for $4 in premium or better ($4 in premium is equivalent to $1,000) and would have been filled on the 11th of August at or near the premium requested. In this hypothetical example, we will use a value of $4.2 simply because that is the Black and Sholes value assigned by our charting software.

In figure 1, you can see that although the order was placed on the 8th of August, it took a substantial rally in order to get filled. Patience such as this can lead to missing trades but will also help you to avoid premature entry and potential disaster should the market see a spike in volatility.

This particular trade creates a scenario in which there is a great deal of risk, in fact unlimited risk, above the RBE of the short option. In this case, the RBE is 1394.2 and was calculated by adding the premium collected to the strike price of the short call option. Keep in mind that transaction costs would reduce the amount of premium collected and shift the RBE and risk closer to the market. The amount of premium collected represents the cushion, or the amount in which the trader can be wrong in their speculation that the futures price will be below the strike price at expiration before the trade results in a loss.

The maximum profit is equivalent to the premium collected ($4.2 or $1,050) minus any commissions and fees paid and occurs if the futures price is trading below 1390 at expiration. However, the profit zone of this trade, or where this trades money at expiration, is impressive. This is visually displayed in Figure 2.

Assuming that this short option is held until expiration and it was possible to sell the 1390 call for $4.20 ($1,050 for a full sized contract or $210 for a mini) in premium, it would be profitable with the price of the futures market at any point below the RBE of 1394.2 before considering transaction costs. In other words, the only way for this position to be a loser at expiration is for the futures price to be above the RBE.

It is important to note that although the position is still profitable in between the strike price of the short call and the RBE, the amount of the profit diminishes every tick that the market is trading above the strike price. Once the market surpasses the strike price, it is equivalent to being short a futures contract and exposes the trader to theoretically unlimited risk.

It is easy to see that a short option strategy if implemented effectively can provide traders with an edge over the alternative. In this particular example, the futures price was over 80 full handles away from the strike price of the short call. The distance from the market and the amount of premium collected provides the position with plenty of room for error. After all, I am not perfect and I assume that you aren’t either.

What you should also know is that without proper risk management knowledge and instinct, what looks to be a great strategy can turn into disaster. This is due to the fact that option selling involves unlimited risk and limited profit potential. It is imperative that short option positions are monitored closely, additionally if you aren’t ready for the responsibility and risk involved you should be working with a full service broker familiar with short option trading. Although more options than not expire worthless putting the odds in your favor with short option trading doesn’t produce automatic success. It is critical that risk on the losing trades is properly mitigated before the damage gets out of hand. This is where an experienced broker may come in handy.

The intention of this article was to give you the premise behind the theory of option selling and offer a practical approach to implementation. What you have read is only the beginning when it comes to the practice of premium collection. I hope that I have intrigued your interest enough to open your mind to the possibility of accepting limited profit potential and unlimited risk; sometimes the quantity of wins trumps the quality of a win.

*Futures and Options Trade Involves Substantial Risk of Loss and is Not Suitable for All Investors.

Carley Garner is Senior Market Analyst and Broker with DeCarley Trading, and a columnist for Stocks and Commodities. The co-author of Commodity Options and author of the upcoming book, A Trader’s First Book on Commodities , Garner writes two widely-distributed e-newsletters, The Stock Index Report and The Bond Bulletin . She provides free trading education to investors at www. DeCarleyTrading. com. Garner is a Magna Cum Laude graduate of the University of Nevada Las Vegas.

Introduction to Options

As always, we shall start with a definition. Options are a form of derivative. Options take the form of a contract where one party sells the right in the contract (often called the writer of an option) to the buyer of an option. The buyer pays a premium for the option to the seller and in return the buyer has the right but not the obligation to exercise the option. The option contract has references to the underlying asset, the duration of the option and expiry date and a reference price as well.

These contracts are traded both over the counter (OTC) and on exchanges. There are two types of options, call options and put options. Call options entitles the buyer to buy the asset by a fixed date and price. Put options entitle the buyer to sell the asset by a fixed date and price. The price of the contract is known as the strike price, which is agreed by both parties, and the contract should be executed by a particular date known as exercise date.

As well as call and put options there are American and European options too. Don’t be fooled by their names as they have no relation to where they are traded. There is a difference between American and European options. American options can exercised at any time during a pre-agreed period whereas European options have to be exercised on the exercise date (one date). This means that American options are more valuable than European options as the former gives the buyer more opportunities to exercise over some duration of time rather than as at expiry date as with European options.

There are four different positions a trader can place in the options market. These positions are as follows; long calls, short calls, long puts, short puts. A long call is when a trader believes that the option exercise price will be greater than the share price and that the share price will increase. The trader then has the option to buy the stock at a designated price. If the share price is higher than the exercise price then the trader profits.

A short call is when the trader thinks the share price of a stock will decrease when the other party has an option of buying the shares from the trader. If the share price decreases then the trader will make a profit. If the stock price increases then the trader will make a loss.

A long put is when the trader thinks the share price is in a bearish market. In other words, the share price will decrease. The trader can sell the stock before the exercise date. If the share price is below the strike price then he/she will make profit. If the share price is above the strike price than the contract will be not be valuable and the contract will run its course until the exercise date.

A short put is when the trader thinks that the share price is in a bullish market. In other words, the share price will increase. If the share price of the stock is above the strike price then he/she shall make profit. If the share price of the stock is above the strike price then he/she shall make profit.

There are two uses of options for financial intermediaries, one is for speculative purposes and the other use is for hedging. It is also important to note that there are transaction costs which involve the execution of the trade. It is might be wise to diversify your portfolio as this may help diversify the risk across all asset classes.

Options contracts do bear risks. The seller/writer of an option can have infinite losses if markets go against the seller. The buyer of an option only stands to lose the premium he/she has paid.

About the Author

Introduction to Options Trading

People use options as a means to bet on the direction of a stock. Options generally require less of an initial investment and have more leverage than stocks. The following options tutorial was created to help you understand exactly how they are used an investment vehicle.

An option is a security with some unique characteristics. It is traded much like stocks but there are some significant differences between the two.

Put simply, an option is a right to buy or sell an underlying asset, like the stock of a company. The holder of an option can choose to use his option to make a purchase or sale of the asset at a specified price within a specified time period.

The option gives him the right to carry out these trading activities at pre-determined terms but do not impose an obligation to buy or sell. In effect, the holder can either use the option before the time it expires or choose to ignore it.

Options are based on a contract between two parties who have opposing views on which way the price of an asset will move. When used correctly, they can act as a very powerful tool for investors. The amount of flexibility that they offer means that you can easily combine multiple options to create highly complex trades that fulfill a very specific investment objective.

For example, you can create an option combination to bet that a stock will not move outside a particular range or the other way round (referred to as a straddle).

Just like any other security, an options contract comes with its own clearly defined terms, conditions and price. It is as legally binding as any other investment.

Illustration of a Simple Option

The concept of options can be understood easily by using an example. Company A is a start up, which is on the verge of launching a great software product. There is no guarantee that the product will be successful.

But a smart investor who has a good idea of the applications of this particular product can choose to gamble that the company will reap the rewards of its successful product some time in future, say a year from now.

His guess is that if the product is launched and is in great demand, the company’s prospects will improve. The shares of the company will grow in value from the current levels. To take advantage of this future expected increase in prices, the investor can purchase an option, which allows him to buy shares in the company at a price close to current levels.

If his guess is correct and the company’s share prices go up significantly, he can exercise his option to buy the company’s stock at a price level much lower than the current market price. He can then sell these shares immediately in the market to make substantial gains from the difference between purchase and sale prices.

In case his prediction fails to materialize and the company’s shares either remain at the same price level or fall to a lower level, then he can choose to simply ignore the option. His net loss is limited to what he paid for the option, which is much less than what he would have paid for actually buying the shares.

An option has some special characteristics:

It gives the holder the freedom to buy or sell the asset at his discretion at terms which have already been determined at time of the creation of the option. This gives him a lot of flexibility in adapting his investment strategy to match current market conditions.

Options are highly speculative and the holder basically makes a gamble on how the asset will fare in the future. The speculative nature of the option and the inherent safety net that it provides allow investors to make large risky bets without putting a lot of money at stake.

To trade in options, an investor needs to have a good understanding of the markets. The most important skill to be successful in options trading is an ability to guess which way the market will go and this comes with experience in investing.

Like with any other kind of investing, the risk with options trading can be reduced by tempering your speculations with a dose of caution.

An option holder can purchase an option to buy or sell an underlying security. The holder of an option to buy has a ‘call’ option, while a sell option is referred to as a ‘put’ option.

Calls: The call option holder can buy the asset at the price mentioned in the options contract within the time specified in it. The holder speculates that the asset will grow in value within the time period of the option. At the end of this period, he hopes to be in a profitable position because of his right to buy the stock at a low price. The holder of a call option is said to have a ‘long position’.

Puts: The put option holder is said to have a ‘short position’ on the underlying stock. He can sell the stock within the option’s time frame at the price mentioned in the contract. The put holder believes that the share price is set to fall during the option term. He hopes to make a profit by selling at a higher value than he can get by selling in the open market. A put option is good way to protect your investment from any risk of decline when the economy is volatile.

Recommended for you:

Introduction to Binary Options Trading – ¡Importante!

Introduction to Binary Options Trading

Please read our Introduction to Binary Options Trading before investing money into binary options trading! This article is to provide you with the basic idea of binary options trading on a nutshell and suggestions to increase your chance to success! Thus, it is essential that readers understand this introduction to binary options trading article in order to minimize unnecessary loss of money. Practicing a new skill while being aware of the risk would definitely make the learning journey be more enjoyable!

Why Choose Binary Options Trading?

Binary Options is a new and exciting way to make money online while being in the comfort of your home. You may also come across many ads or commercials in the internet attracting you to try binary options trading. And anyone 18 years old and above would have been interested venturing into this new exciting money making platform. One of the main reason is because trading platform is highly accessible as long as there is internet connection and a personal computer. Trading binary options also lets you know the exact amount that you are going to risk and also the exact potential profits (compare to a stop-loss in forex, there is always chance where the price can drop way below your stop-loss which results in a much larger loss than planned). Therefor, traders can always plan ahead on how to manage their funds. Moreover, the outcome of your investment can be known rather quickly, hence your potential returns also comes in immediately. While we are able to find group of people that are making money through this new instrument in a short span of time, we also can hear about people losing all their money in binary options as well.

This should not come as a shock to you because trading binary options is very similar to the conventional stock/forex/commodities trading where losing is inevitable. It will happen at some point in your trading career. The only way to encourage profits from binary options trading, like conventional trading, is to collect more wins than losses. Getting profits from binary options is not as easy as it looks although the returns may seem to come easy since it offers immediate payout to successful trades. However, there are definitely actions which experienced traders take to increase their edge and improve their performance.

Importance of Basic Trading Knowledge and Practice!

Like all aspects in life, we learn from experience and mistakes are often a great teachers. So new traders should take their time to learn and experience what sources are available in binary options industry to increase their winning performance. We always recommend new traders to trade through Demo account before trading with real money because when inexperienced traders tend to make mistakes during in learning curve. Practice is needed in order for a trader to form his/her own strategy and learn to be discipline to obey it during trading sessions.

How do we improve ourselves as a trader in binary options? Well, we have to study the basic of trading by learning various fundamental and technical analysis before we trade. It is dangerous to try to guess where the price of a certain asset in a certain time frame without any solid analysis. We may as well call it gambling with our gut feeling, which in most cases we will see our money disappear in thin air. There are various site that offers free education on basic technical and fundamental analysis where new traders can gain some knowledge.

Profiting while Learning Binary Options Trading

Does this mean that binary options trading is an instrument for people who has extra time to spare? This is correct if you are aiming to be a full competent trader that can decide when to place a trade. Fortunately, there are binary options Signal provider that performs well and it enables new traders to profit almost immediately by following their signals . New traders can also learn while taking trading signals from these signal providers! Binary Options Signal provider are individual/group of traders that gives you specific signals on when to enter a trade based on their analysis. Great signal providers should have over 70% accuracy. It will be beneficial to at least try out a good Binary Options Signal provider for yourself because there are always valuable lesson to be learnt and more importantly, the chance of gaining profit is higher especially for new/inexperienced trader . Binary Options Sentinel recommends Mike’s Manual Signal group as it has a group of dedicated traders that gives good signals on a daily basis. Traders will get the opportunity to be in this group should you sign up with any recommended broker through our website. Please read our review on Mike’s Auto Trader for more details as well.

Besides receiving trading signals from a group of experienced trader, there are also binary options auto trading software which is programmed to execute trades or to provide signals to traders! Every binary options auto trading software has its unique algorithm which performs calculation on when to enter a trade on behalf of its owner. There are typically two modes to an auto trading software, an Auto trading mode or semi-auto trading mode. Auto trading mode allows the software to execute trades on behalf of the traders and it will enter a trade based on it’s in-built algorithm. On the other hand, semi-auto mode allows the auto trader to generate various signals for different asset class. The trader then selects which signals he/she is interested in trading. Typically, in order for a trader to earn profits, his/her winning rate should be above 60%, and this is no different to an auto trading software. Our list of trusted binary options auto trading system has been able to perform at a ITM%(In the Money) of higher than 70%! So, an auto trader is a great tool especially for traders which do not have much time to trade in front of a computer!

Beware of Binary Options SCAMS.

Unfortunately for the industry, many scammers are taking advantage of binary options industry to make money out of it too and innocent traders are the one that pays the price for it. Binary options scams comes very often in the form of brokers and binary options service providers. Hence, innocent traders can get scammed in two different angle, during the sign up with a potential binary options broker and a service provider that does not make any profit. There are a number of binary options brokers that aims to collect traders deposit and not return a single penny to them. There are also binary options services, very commonly binary options auto trading software that are presented as a “Get Rich Quick” software. T he only achievement that the auto trading software gain is to drain the user’s money. Auto trading software are being developed more often than scam brokers! Having said that, “Binary Options Sentinel strives to identify these scams and share them with binary options traders around the world in hopes to save them from such a despicable loss of money”

Feel free to check out our list of Recommended Binary Options Brokers. Trusted Binary Options Signals as well as our Blacklist . The recommended are brokers are tested and selected judging from trading experience and withdrawal process. Obviously one of the important factor we need to make sure is that traders are able to withdraw their funds. Binary Options Auto trading software that made it to our trusted binary options signals list are auto trading software that are able to perform consistently and proven to be able to generate profits for traders (ITM% of over 70%). These auto trading software is perfect for individuals that lack the time to perform technical analysis and be in front of the computer for trade executions. The recommended auto traders are FREE and all it needs to run the program is an initial deposit of funds for trade executions. Lastly, the Blacklist page is the page that traders need to visit from time to time to keep up with latest binary options scams or it can serve as an important reference page on which binary options services to avoid. Good luck and Trade Safe!!

Introduction to Binary Options Trading: Afterword!

We hope that the “Introduction to Binary Options Trading” article have benefited you with the basic idea of what Binary Options trading has to offer and it’s risk. Sometimes binary options trading is associated with online gambling due to it’s short expiration time (as short as 30 seconds, 60 seconds expiry). However, no matter the expiry time, making a Call or Put options based on your gut feeling is definitely gambling! A binary options trader can always increase his chance of winning by utilizing proper trading strategies and binary options signals services! Hence, that is the main difference between gambling with your gut feeling and making a decision based on potential rewards/risk!

“Please feel free to contact us at Facebook, Binary Options Sentinel, or email us at binaryoptions. sentinel@gmail. com for queries! We will be happy to provide some answers or advise should there be within our knowledge and capabilities”

An introduction to trading dairy futures and options

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An Introduction to Options Trading

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Options

What are options?

An option gives you the right, but not the obligation, to buy or sell a specified amount of a particular underlying security at a particular price. You can do this by exercising the option before its specified expiration date. An option that gives you the right to buy an underlying security is called a "call option", or "call". An option which gives you the right to sell an underlying security is a "put option", or "put". The amount you pay for the option is called the premium. A buyer of an option is called a holder while a seller of an option is called a writer.

Most options have standardized terms - such as: the underlying security, the contract size, expiration date, exercise price, and other terms. This means you can't customize the option. For example, a call option on a stock gives you the right to buy 100 shares. You can't buy a stock option which gives you the right to buy 67 shares of the underlying stock. The reason there are standardized terms is that it allows the options to have more liquidity because the options share similar characteristics.

Options give you considerable leverage as they allow you to control a large amount of an underlying security with very little money. Many times you'll hear investors talk about "derivatives". Options are an example of a derivative because their value is derived from the value of another security.

Although when most people hear the word "options" they think of stock options, options are written on almost all financial products, including: stocks, stock indexes, bonds, currencies, commodities, futures contracts, and even market characteristics like volatility.

When it comes to stock options, not all stocks have options traded on them. In order for a company to have its stock have an option traded on it, the stock must meet eligibility requirements. If a stock no longer meets those requirements then the exchanges will stop issuing new options on the stock while (most of the time) allowing continued trading of the existing options. Occasionally, adjustments have to be made to stock options to adjust to stock splits or stock dividends.

Why do people trade options?

There are two main reasons why investors trade options. The first reason is to hedge another position. An investor may have a position in the underlying security and feel they can make more money by integrating options into their position. For example, they may be long a stock and feel the stock price will stay the same price for a while so they write a covered call option to collect the premium.

The other reason that investors trade options is for speculation. Investors feel they can make a lot of money if they buy an option which they think will rise considerably in value. Many times they are seduced by the higher leverage and lower cash requirements available with options. Other times it is the unique options strategies which seduce them into thinking they are more likely to be successful using a supposedly "complicated" strategy.

Although any option tutorial will teach you about how options can be exercised, almost none of the retail traders have any intention of exercising an option. They mostly close out their options position by liquidating the position through an offsetting transaction.

My Opinion

There are two unique advantages options offer - leverage and versatility. But each of these advantages also has limited potential. First, the problem with using large amounts of leverage is that it eventually leads to going broke. Just because you can use leverage doesn't mean you should. In order to ensure that you won't go broke, you need to employ a pretty conservative money management system to manage your risk. But this de-leveraging ends up negating the leverage offered by options in the first place.

The other advantage options offer is versatility. This refers to the ability to put on trades based on custom-made strategies so you can take advantage of market opportunities that are not available by trading "plain" products. For example, these strategies may involve taking advantage of options-specific features like volatility or time value. Or the strategies may involve structuring a trade so that there is limited downside. The problem with these versatile strategies is that they don't offer an intrinsically higher return than other option strategies or trades involving plain securities for that matter. One mistake amateur traders make is that they see some unconventional strategy like option combinations or straddles and assume there is some greater-than-normal profit in these strategies simply because fewer people use them. The truth is that, although not as many people trade these strategies, these strategies are popular enough so that these markets are just as efficient as other markets. In cases like these, amateur investors sometimes feel like they are discovering something new when these strategies are well-known to advanced investors and traders.

Despite the unique features that options offer, they are very over-rated. This is because they are "wasting assets". This means that - everything else being equal - the price of the option will decline as time goes on because the time value erodes. It is said that something like 80% of all options expire worthless. Buyers of options must not only be correct about the direction of the market but also the timing and the magnitude of the move.

One of the tells of an overconfident beginner is that they want to jump right into options. There is plenty of money to be made in "plain" investments so that there is no need to start with complicated securities. Even if you "only" trade stocks you will still be learning essential trading skills that you can later apply to options like market psychology, entries and exit criteria, risk management, money management, and other stuff.

If you do trade options, pay attention to liquidity. When it comes to options that don't trade often, it is important to keep in mind that the last sale price of the option many times may be "stale". This means the market has moved away from the last sale price so the last price is not indicative of where the market is. You should always be looking at the bid and ask to see what the current value is.

Stocks

Bonds

Track 'n Trade Futures End of Day Options

Video Transcript

In this Track 'n Trade Pro Options trading training video, I want to cover with you, just the basics of Options. Trading Options is not a whole lot different than trading Futures.

Many people ask me, "Do I need to know how to trade Futures if I'm only going to be trading Options?" The answer to this question is, (in my opinion) is an emphatic YES! You can't trade Options without knowing how to trade Futures contracts, first. They go hand in hand, just like coffee and cream, and pen and paper. You simply can't have one without the other. Well, okay, maybe in extreme cases.

If you've picked up this Options trading training video, and you haven't already gone through the Futures trading training video, first, stop right here! Go back to our website: www. geckosoftware. com and pick up the Futures trading trading videos, first.

This first section is an introduction to Options, where I simply explain the basics. It's very important that you understand the basic concepts and the terminology; so when you call your broker, he or she understands your request and your order is executed properly. You'll also need to read through the material that comes with the CD-ROM and through this section, so you'll understand the concepts, as we get further down the path of executing simulated trades.

Why buy Options? Two reasons: Limited risk, and leverage.

When you buy an Option, your risk is limited to the price you pay for the Option. From a leverage standpoint, it allows you to control inexpensive assets. Such as Futures contracts, for a fraction of the cost, to purchase a contract outright. So, if you think that the price of the commodity is going to increase, you can buy a Call Option, instead of buying the Futures contract itself. Or if you feel the price is going to decrease, you can buy a Put Option, instead of selling the Futures.

Now, before you start buying Options, a word of caution: Most people who buy Options, lose money. ¿Por qué? Because they buy Options and that's all they do. They don't take advantage of any of the Option strategies. When you finish with this version of Track 'n Trade Pro, you will know how to actually take advantage of the factors that cause most people to lose money.

We're going to teach you about 10 of the most safe and powerful Option strategies, that can pull profits out of the market under almost any conditions.

First, very simply, there are only two kinds of Options: Call Options, and Put Options. The one concept that most people have problems with understanding, is that you can both purchase a Call and Sell a Call.

The same goes for Puts; you can purchase a Put and you can sell a Put. Therefore, when you want to get rid of an Option, you must tell your broker to liquidate your Option. Because if you tell them to sell an Option, that's what he'll do. You still owe him the Option you wanted to liquidate.

Now, of course if you're with a good full service broker, this won't really be a problem. But if you ever get into a situation, where you don't have someone holding your hand through the process, this could pose some trouble. So, it's a good idea to always get in the habit of using the correct term liquidate, rather than saying Sell.

Call Options: Buying a Call Option gives you the right, but not the obligation to buy one contract of the underlying commodity at that given price, as long as you make the purchase before the Option expires. The given price is known as the strike price. The cost of the Option is known as the premium.

The person who created the Option, which you purchased, is known as the Option Writer. The Option Writer has the legal obligation to sell one contract of the underlying commodity at the strike price you specified. If you should decide to exercise your Options rights.

Put Options: A Put Option is just the opposite. When you buy a Put Option, it gives you the right to sell or become the writer of any given underlying Futures at the given strike price before the expiration date. The Option writer has the legal obligation to buy the Futures commodity from you, at the strike price. If you exercise the Option before it expires.

Option strike prices and expiration dates. Options have standard strike prices and expiration dates. What is a strike price? This is the fixed price at which the

Option can be exercised. It is also known as the exercise price. Options are available for lots of different strike prices. Your broker will have a strike price table, or you can find them listed on the internet. Of course, Track 'n Trade Pro helps you with that as well.

Expiration Date: This is the date on which the Option expires. Each Futures Option has it's own expiration date. Again, your broker will give you a list, or you can find it on the internet, or of course, it's listed in Track 'n Trade Pro. But keep in mind that an Option on Futures usually expires a whole month before the contract itself expires.

Options Writer: An Options Rider is any person who writes or creates an Option. When you sell an Option that you don't already own, you have just created a new Option. This makes you an Option writer.

In the money Option: Call Options that have a strike price below the current market price of the underlying commodity, are said to be in the money. Likewise, Put Options that have a strike price, which is above the current market price of the underlying commodity, is in the money.

For example: when pork bellies are trading at 70, a pork belly 60 Call Option, 60 strike price, would be 10 points in the money. An 80 Put Option would be 10 points in the money.

Out of the Money: This of course, is just the opposite of in the money. Call Options that have a strike price.

Stocks, Futures, Forex, and Options trading involves risk and is not appropriate for all investors.

An Introduction to Commodities Futures Markets

In the futures markets, individuals, institutions, and sometimes governments transact with each other in commodities for price-hedging and speculating purposes, trying to make (or save) money.

An airline company, for instance, may want to use futures to enter into an agreement with a fuel company to buy a fixed amount of jet fuel for a fixed price for a fixed period of time. This transaction in the futures markets allows the airline to hedge against the volatility associated with the price of jet fuel.

Although commercial users are the main players in the futures arena, traders and investors also use the futures market to profit from price volatility through various trading techniques.

One such trading technique is arbitrage , which takes advantage of price discrepancies between different futures markets. For example, in an arbitrage trade, you purchase and sell the crude oil futures contract simultaneously in different trading venues, for the purpose of capturing price discrepancies between these venues.

The futures markets are administered by the various commodity exchanges, such as the Chicago Mercantile Exchange (CME) and the Intercontinental Exchange (ICE).

Investing through the futures markets requires a good understanding of futures contracts, options on futures, forwards, spreads, and other derivative products.

The most direct way of investing in the futures markets is to open an account with a f utures c ommission m erchant (FCM). The FCM is much like a traditional stock brokerage house (such as Schwab, Fidelity, or Merrill Lynch), except that it’s allowed to offer products that trade on the futures markets. Here are some other ways to get involved in futures:

Commodity trading advisor (CTA): The CTA is an individual or company licensed to trade futures contracts on your behalf.

Commodity pool operator (CPO): The CPO is similar to a CTA, except that the CPO can manage the funds of multiple clients under one account. This pooling provides additional leverage when trading futures.

Commodity indexes: A commodity index is a benchmark, similar to the Dow Jones Industrial Average or the S&P 500, that tracks a basket of the most liquid commodities. You can track the performance of a commodity index, which allows you to essentially “buy the market.” A number of commodity indexes are available, including the Goldman Sachs Commodity Index and the Reuters/Jefferies CRB Index.

These examples are only a few ways to access the futures markets.

A number of organizations regulate the futures markets, including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). These organizations monitor the markets to prevent market fraud and manipulation and to protect investors from such activity.

Trading futures isn’t for everyone. Futures markets, contracts, and products are extremely complex and require a great deal of mastery by even the best investors. If you don’t feel that you have a good handle on all the concepts involved in trading futures, don’t simply jump into futures — you could lose a lot more than your principal.

If you’re not comfortable trading futures, don’t sweat it. You can invest in commodities in multiple other ways.

OPTIONS TRADING 101

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Come join me for my introductory 1 on 1 live session on options basics for $175.00 (a value of $360.00) This is ideal for beginners seeking an entry-level understanding of options trading. Get the right guidance and discover the world of options, and its risks and benefits to your investment knowledge today.

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About Geoff

Geoffry Wong has 20+ years of experience as a Proprietary Options and Derivative Trader with Goldman Sachs. Geoff now works with select private clients teaching aspects of trading including statistical arbitrage and options theory.

Risks Involved With Trading Options

In our introduction to options trading we have already provided a detailed explanation of what options are and what trading them entails, along with an overview of all the advantages. If you are seriously considering this form of trading as part, or all, of your investment strategy, then these basic topics are important to know.

It's also advisable that, before you actually get started, you also understand some of the downsides to trading options and the risks involved.

With any form of investing, your capital is ultimately at risk to some degree as soon as you invest it, and options trading is no different. While there a number of ways that you can limit your risk, through using the appropriate trading strategies for example, there are certain direct and indirect risks that you really should be aware of. On this page, we provide further details on this, covering the following:

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Potential Losses in Options Trading

One of the many reasons that investors choose to trade options is due to the flexibility and versatility they offer, and the wide range of strategies that can be used. In particular, there are a number of strategies that can be used to either limit the risk of taking a position or reduce the upfront costs of taking a position.

With some of the limited risk strategies, it's possible to enter a trade and know exactly what the maximum potential loss is, which can be very useful when planning trades. However, options trading is widely considered to be high risk and it's certainly possible to make significant losses. Obviously, the more you learn and the more experience you get the less likely you are to make catastrophic losses, but even experienced traders can make mistakes and it's important to know what sort of risks you are exposed to.

A major advantage that is often mentioned is the fact that you can use leverage to effectively multiply the power of your capital. For example, if you bought $1,000 worth of call options based on Company X stock then you could stand to make much bigger profits. If that stock went up, then you should directly invest that $1,000 into the stock.

However, the flip side to this is if the stock fell in value, or even just remained the same, your call options may end up worthless and you would lose your entire $1,000. Had you bought the stock instead, you would only lose all that $1,000 if Company X went bankrupt. This highlights a major risk, that it's possible for options that you buy to expire worthless, meaning you lose anything you invested in those contracts.

Equally, when writing options, you can possibly lose large sums of money if the underlying security moves dramatically in price in an unfavorable direction. There are steps that you can take to limit losses, such as using stop loss orders or creating spreads, but it's vital that you are aware of the potential losses that you can incur whether buying contracts or writing them.

Complexities of Options Trading

The very nature of options trading and the complexities involved is a risk in itself. While it isn't really that difficult to understand the basics, some aspects of options trading and the strategies you can use are a lot more complicated. It's a fairly common mistake for investors, and particularly beginners, to not fully understand what they are doing and this can be a quite dangerous mistake to make.

You can overcome this risk by learning as much as possible, including the advanced topics, and only using strategies that you are completely familiar with. It's all too easy to second guess what you are doing and why, and this is something you should really try to avoid. Knowledge will give you confidence.

Liquidity of Options

Options trading is far more common than it used to be, with an increasing number of investors getting involved, but there can still be some issues with liquidity of certain options. Because there are so many different types, it's quite possible that any particular option you wish to trade might only be traded in very low volume.

This can present a problem, because it may make it difficult to make the required trades at the right prices. It isn't a major issue if you are trading in very small volumes or only trading the most popular options, but for those trading large volumes or less mainstream options it can create additional risk. The exchanges typically use market makers to ensure certain levels of liquidity, but this doesn't necessarily remove the problem entirely.

Costs of Trading Options

Closely linked to the liquidity of some options is the costs involved in trading them. The price of an options contract is always quoted on the exchanges with a bid price and an ask price. The bid price is the price you receive for writing them and the ask price is the price you pay for buying them.

The ask price is always higher than the bid price, and the difference between these two prices is known as the bid ask spread, or the spread. The spread is basically an indirect cost of trading options, and the bigger the spread the more those costs increase. A lack of liquidity will generally lead to bigger spreads, and this is another potentially significant risk.

The direct costs of trading options can also be higher than some other forms of investment: specifically the commissions charged by brokers. Such costs are an unavoidable part of any kind of investment, and should always be factored into any trading plan you prepare. The reason they are particularly relevant to options trading is that most strategies involve creating spreads.

Creating an options spread involves entering two or more positions on different options that are based on the same underlying security. There are very good reasons for creating these spreads, but the fact is that taking multiple positions effectively on a single trade does result in higher commissions.

Time Decay

Another unavoidable risk is the effect of time decay. All options have some kind of time value factored in to them, and typically the longer they have until expiration the higher that time value is. Therefore, any options that you own will always be losing some of their value as time goes on. Of course, this doesnвЂ™t mean that they always go down in value, but time decay can negatively impact the value of any options that you hold on to.

You can read more about time decay here .

Summary

There are some investors that are aware of the risks involved in trading options and because of this they decide to avoid options as investment vehicle. The simple fact is that it isn't for everyone; it's a relatively unique way to invest and there are certain pitfalls and downsides.

However, no form of investment is without its disadvantages and there are also plenty of reasons why trading options is a good idea. There are certainly many investors who do make very good money from it and it's perfectly possible for anyone to do so. If you are considering getting involved, then your decision should really be based on whether the advantages of trading options outweighs the risks involved in your view.

If you do feel that trading options is for you, then the next thing you logically need to know is where you can buy, sell, and write options. For more information on this clearly important subject, please read the next page in this section: Where to Trade Options .

Posted on Jun 07 2008

An Introduction to Options and Futures Trading By Larry Haywood

In the world of finances, futures and options are classed as “derivatives”. They are financial instruments whose prices are calculated by the price of another underlying asset or security. Generally, futures and options are used to guard against risk and for speculative roles. Whenever an investor from Europe purchases shares of an American company on the NYSE, for instance, he is exposed to some stock price fluctuations and currency exchange rate risks. To minimize his overall degree of risk, the investor can purchase currency options to make certain the exchange rate is fixed when he sells off the stock and converts the American dollars back into euros. We will now take a better look at how futures and options work.

Futures

A future is merely an agreement to purchase or sell an asset for a preset price at a specified date in the future. A future’s fundamental asset can be, amongst a lot of other things, an agricultural commodity, individual shares, stock market indices, bonds, and interest rates. A future contract will have fixed delivery dates, traded units, and other clearly defined terms and conditions.

For illustrative purposes, let’s imagine that you’ll “open” a futures position by either purchasing or trading an equity futures contract where the underlying asset are shares. Whenever you’re anticipating the price of the stock to go upwards in the near future, you will purchase a futures contract that will oblige you to receive a specified number of shares at a preset price on a certain date in the future. This is known as a long futures position. If, on the other hand, you’re anticipating the price of the stock to go downwards in the near future, you’ll sell a futures contract that will oblige you to deliver a specified number of shares at a preset price on a certain date in the future. This is known as a short futures position.

Like any other kind of investment, futures contracts carry a risk – that market prices may not go in the direction you thought they would. Nevertheless, they enable you to profit both in a rising and a descending market. When you invest in shares, you typically profit from purchasing low and selling high. But with a short futures position, you can still make money even if the stock price drops.

Options

An option gives its holder the right to purchase (call option) or sell (put option) an underlying asset at a planned price before or on a particular date in the future. But unlike a futures contract, the holder of an option is not obligated to take any action. If the holder decides not to exercise the option, all he stands to lose is the premium he gave for it.

Imagine you currently have a number of shares of a specified company’s stock and you plan on selling them in a month. If you anticipate the share price to drop in this one-month time period, you could purchase a put option that will give you the right to sell your shares at a preset price at any time within the next thirty days. Whenever your expectations turn out to be right, you’ll be able to sell your shares at a price that is more than the market value.

Options could be utilized as an insurance mechanism against future dips in the price of an underlying asset. The purchasing of options arrives with limited risk as the holder of the option only stands to lose the option premium if his anticipations of market movements do not happen. Additionally, they allow you to take part in market price movements without actually having to take on the underlying asset.

Hopefully, this brief article has served to shed some light on what futures and options are and how they function. The examples preceding were very simplified and were only meant to show the basic concepts of derivative trading. In reality, trading with derivatives is a good deal more complex and warrants additional reading. You need to be extremely acquainted with the different types of products to be successful and fruitful in your positions.

Larry Haywood is a stock market enthusiast, focusing on innovative and unique techniques for building up wealth via the stock market. For a limited time, you can claim the “Insider’s Guide To Forex Trading” e-book absolutely free at: http://www. mystockmarkettips. com/ebook-offer. htm

An Introduction to Options Trading (Securities Institute) (Inglés) Tapa blanda – ago 2006

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""An Introduction to Options Trading is a pleasurable book to read. The simplicity of the language and exposition make it accessible to a wide spectrum of interested readers, especially to option traders. Although no rigorous mathematics is discussed in this book, the formulas used are well motivated and explained.""

Karma Dajani, Utrecht University, The Netherlands

"An Introduction to Options Trading" is one of the first books to explain where the profit of option traders really comes from. Although people usually assume that this profit relates to bid-offer spreads, this book actually shows that there is a much more sophisticated way of making money when trading options.

This book shows why investors use option structures to satisfy their needs, and what practical implications these option structures have on the trader.

Explaining the theory and practice of options trading from scratch, the reader will quickly become familiar with delta hedging, gamma, vega and theta and how these terms relate to the trader's profit. Throughout the book real-life examples will be used to explain the practicalities of options bringing the theory behind options to life.

After reading "An Introduction to Options Trading" the reader will understand how options can be tailored to an investor's needs. The book will give the reader an understanding of the incredible potential of making money through options and will equip him with the necessary tools to deal with options in practice.

5 de 6 personas piensan que la opinión es útil

HASH(0x9c6c9210) de un máximo de 5 estrellas Not very useful to the individual investor. 8 de abril de 2011

Por T. Berger - Publicado en Amazon. com

Formato: Tapa blanda Compra verificada

Given the other reviews of this book, I was very much looking forward to receiving this book. My disappointment was enormous. This book reads like a hastily thrown together Master's thesis that, with its multiple uses of examples directly from Hull adds little to the literature of options theory.

Although it has some basic mathematical material (high school calculus level exposition), these sections are sloppily written and often fail to define terms. For example, in Chapter 2 on the Black-Scholes formula, N(x) is stated as "the standard normal distribution" without defining the function. Now the normal distribution is well enough known, but there are different normalizations so how do I know which particular one he is using? Only later in Eqn. 6.3 do we see the derivative N'(x) written explicitly to define the normalization. But here there is a massive typo in the formula so it's not really a compensation.

But what's worse is that in spite of its title, the book has little practical knowledge to impart on how options are actually traded and how they actually perform under real market conditions. A very useful book would have presented real trading scenarios and tracked them through the gyrations of price and volatility to their maturity to show how REAL options perform in a REAL market. Instead, this book has examples with 0.02 shares of stock being bought in zero-profit 100% delta hedge scenarios - highly theoretical, in fact totally useless, to the real options investor. Chapter 10, "Several options strategies", reads like a sparse Chinese menu of options plays, each with a pathetically simple example that anyone can find in the most basic Wikipedia articles. There is no discussion of the actual situations that these strategies are used in, nor of the possible outcomes of each strategy with variable market conditions.

But my favorite "example" is on page 112 where De Weert poses the scenario "Consider an investor who knows that TomTom is due to come out with a statement that will be a real market mover." In other words, "Consider an insider trading scenario in which a criminal wishes to exploit illegal information. " It's just amazing how the corrupt culture of Wall Street has permeated even the supposedly academic treatises. Again, this example is useless to the real individual investor who can't possibly "know" such things. I guess if you're an insider trading criminal, this is the book for you!

I'm not an insider trading criminal. I'm a professional physicist. And if a student of mine submitted this as a thesis project I would feel generous in giving it a B - grade, based on the shoddy mathematical treatments and the almost laughable simplicity of the illustrations and plots used in the book. To be fair, other "introductory" options book out there are even more simple minded and useless to the technical investor. Why can't someone write a good book with enough math and REAL EXAMPLES to show how these things are actually used to make (and lose) money?

Be warned: you can lose a lot of money VERY quickly playing with options. This book will not help you AT ALL to learn how best to use these extremely dangerous financial power tools in the real world. It will show you the most basic elements of the Black-Scholes formula and has some worthwhile examples discussing the greeks and hedging, but for the most part I kept thinking this book was a rather light effort by an average mathematics student who was never allowed on the trading floor.

HASH(0x9c6c9a80) de un máximo de 5 estrellas It's a good book. Very easy to read and well written 27 de diciembre de 2017

Por Amazon Customer - Publicado en Amazon. com

Formato: Tapa blanda

It's a good book. Very easy to read and well written. Its not mathematical intensive so its suitable for beginners. Advance learners and practitioners can gain some insights from this book as well as Frans seeks to explain things intuitively rather than mathematically. Good book to have on the shelf for refresher. However this book is very expensive and rather short.

4 de 7 personas piensan que la opinión es útil

HASH(0x9b7445f4) de un máximo de 5 estrellas A must have for traders 3 de marzo de 2007

Por a reader - Publicado en Amazon. com

Formato: Tapa blanda

This book is the most powerful book on options as it makes the dynamics of options intuitive by focussing on its economics while at the same time providing the mathematics behind it. All this is achieved by using real life investment strategies as examples. The culmination of this book is that it shows the relation between all the Greeks and the profit of a delta hedged option. The book can easily be used as a manual for traders as it gives guidelines as to when to early exercise options and the correlation exposure of composite or quanto option to name just two examples. Any trader or sales man in investment banking should use this as a manual.

4 de 7 personas piensan que la opinión es útil

HASH(0x9b74430c) de un máximo de 5 estrellas Best option introduction available! 7 de marzo de 2007

Por Stuart J. Barton - Publicado en Amazon. com

Formato: Tapa blanda

As a professional equity derivatives trader I have recommend this book to many of my associates and trainees. Mr. deWeert has led the field with this book, cutting though much of the mathematical jargon and explained quite simply the concepts which are so often over complicated. Bravo Mr. de Weert!

4 de 7 personas piensan que la opinión es útil

HASH(0x9beb5b1c) de un máximo de 5 estrellas Not For The Mathematically Challenged 24 de febrero de 2007

Por Steven G - Publicado en Amazon. com

Formato: Tapa blanda

To me, the title of the book is misleading. Book should be titled something like, "An Introduction to the Theoretical/Mathematical Concepts Behind Options." If you're looking for trading strategies, this book does not offer anything that the intro page of an options website does. Save yourself some money, unless you're a math geek (not that there's anything wrong with that!)

Earn 50% - 150% on Your Next Options Trade

An Introduction to Pairs Trading

Depending on the current market environment, traders may need as many tools as possible in order to profit from ever changing market conditions . For example, when there are tight ranges in many stocks, although it may seem difficult to profit from, there are many market neutral strategies which can be used. Many times, traders get intimidated by the term market neutral because it means we are getting away from the buy and hold strategies that we all are used to.

Market Correlation

One strategy that can be very beneficial in today’s markets is the use of pairs trading. Pairs trading refers to taking opposite positions in two different stocks that have shown to have a degree of correlation. While this can be a complex strategy to use at times, the concept behind it is very basic. You want to find two stocks that are historically and conceptually correlated and then look to profit from the variations within the relationship. What you want to do in a pairs trade is look for situations where one of the stocks looks cheap or expensive relative to the other. We would buy the one that looks cheap and sell the one that looks expensive.

The first thing you want to do is find an example of two stocks that are highly correlated . A good example of this would be Coca-Cola and Pepsi. Taking a look at the chart in Figure 1 below showing our two stocks, you can see that there is a correlation. Next, you will find the spread between the prices of the two stocks. To do this we will look at the price of one stock minus the other . We will want to look to see if that spread is historically high or low. To do this you will need to go back in time and find the mean of the spread between the two.

In this example I found that the historical spread between the two falls in a range of $5 and $8 and the current spread is $3, which would be low. With the expectation that this spread will go back to its mean of $7, we would buy the cheap stock and sell the expensive stock at the same time. We would exit both positions once the spread got back to $7.

Soda Spread

Let’s walk through the example with Coca-Cola and Pepsi in more detail.

Looking back at a chart, we can see that in December the spread between these two stocks had narrowed. Knowing that these two stocks have proven to be correlated going back in time, I am going to try and profit from this by taking a view that the spread will widen again. Taking a look back at the historical spread between the two stock prices, we see a range of between $5 and $8. Back in the middle of December the spread narrowed to around $2.

With the expectation that the spread between the two stocks would go back to around $6, we would have bought the stock that looked cheaper (Pepsi) and sold the one that looked more expensive (Coca-Cola) . Looking at the chart in Figure 2, you can see how the price of Pepsi retreated while Coca-Cola held up nicely. While it may have looked like the correlation between the two stocks had uncoupled at the time, the expectations would be that they would re-sync at some point .

If our expectations proved correct, we would profit from Pepsi rising quicker in price and than Coca-Cola or Coca-Cola falling quicker in price than Pepsi. Once the spread between the two stock prices got back to$7 we would close both positions. As you can see in Figure 2 below, the spread between the two did subsequently correct back towards its mean, as the correlation resumed.

Pairs Trading Potential

While this is a very basic example of a pairs trade, I hope you can see the potential in this strategy. We aren’t betting on the direction of the overall market at all in this trade. We are looking at historical data and then placing a bet on two correlated products following their patterns of price movement – i. e. we’re trading the relationship between the two and not the outright market prices themselves. Our example looked at two different stocks. However, different ETF’s or index products make good candidates as well.

These setups don’t always occur that often, but when they do they provide a very low risk opportunity to book some profits. Forming a watch list of stocks that tend to show correlation is a great way to benefit from these situations.

Supply and Demand Resistance

I always say that one of the key differences between Netpicks and “the others”, is that the entire coaching staff trades. Even better, we don’t just show the winning trades. You have seen wins, losses, mistakes and a host of other “bumps” that every traders goes through.

This video below started off with just showing a winning EURUSD trade. It was a good example of how you can trade simply price utilizing key areas. It turned into a totally different video when a trade in the AUDUSD showed up. You will see, in real time, how price action caused me to cancel two trades and then see where price would have triggered the trade and then stopped out. Turns out, proper direction, bad timing. Watch a AUDUSD trade setup, entered and managed. Not picture perfect but, in my humble opinion, shows that sticking to a few rules, you can take the emotion out of trading. Check it out:

For those of you on Facebook, be sure to check out our brand new fanpage and Like us! Click here to check it out!

Free Options Trading Introduction

If you are interested in options trading or how I make money consitently by trading options, then this free webinar is for you. Since you are probably on the other side of the globe I can't invite you for my live options introduction. But to see where I am holding my classes, here is a picture of my office and my training room.

I will talk about the following topics in my free options trading introductory webinar:

What is an option and why is it better to trade with options.

What is the biggest difference between options and forex trading.

What does three dimensional trading mean.

What is the minimum amount you need to have to get started.

How long does it take to be profitable.

How does an options trader's day look like.

What is the right mental attitude for trading.

Why do I sell options to make consistent money.

How much can you earn trading options.

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Patience is the key to success not speed. Time is a cunning speculator's best friend if he uses it right. - Jesse Livermore

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