Option trading has many advantages over other investment vehicles. They can be a complex topic to understand at first - calls, puts, delta, hedging etc. But trust me, many a newbie have started this path just like you. You might think options are a finance novelty. Retail traders are loving the leverage, available asset selection and variety of trades possible with options and combinations of options. Traders can now choose options, not only on stocks, but on indicies, commodities, foreign exchange and exchange traded funds ETFs. A big factor in moving traders from traditional stock trading over to options is the leverage options can provide over the underlying instrument; and depending how you structure a trade, your entire risk per trade can be capped at a per-determined amount. Meaning, you can know in advance what your worst case loss is if the trade goes completely against you - something traditional stock trading lacks. Please shout out if you have any questions or suggestions for the site! Hi Dave, Sorry for the late reply here. I missed the notification of the comment The right strike to buy really depends on your view of the stock and how fast you think it might move. If you want to play it safe, you should buy the next strike down e. Then you will no longer have a position to be assigned on. You cannot, however, have one strike cancel out the other as they are different strike prices. I have sold a naked put option for 10 contracts. I understand that I can protect against that by buying a put on the stock I understand that I need to buy a put that is for the number of contracts I sold and that I should not pay more than my sale price. Otherwise what do I consider in picking the right put to buy? How do I get my obligation to buy the stock cancelled? In other words, how do I get the one stock option to cancel out the other? Dave Hi Nathan, Deep in the money call options will have a delta of 1, meaning that the price of the option will move 1 to 1 with the price of the stock. I purchased an in the money call option that is now deep in the money. I want to lock in my gains. The options expire in Sept. I am not getting much time premium. The option is for 70 and the stock is trading at I am only being offered The premium seems low but that is not my question. I own 10 contracts. What do you think about locking in gains by selling a July 85 for for 5 of my contracts? What is another play that I can do with these in the money options? Nathan Dear Sir, I am trading in Indian market my doubt is follows I have a query on Option delta. I was checking delta for OTM Put and call option strikes. Then I have observed that on puts, strikes are nearer compared to Call strikes with same delta. When Nifty market atCE delta is and PE delta is But the difference from to is and from to is Why this much difference is in price distance Thanking you in advance. If you have another strategy then please tell me. Thank you, Anu India. Hi Steve, Regarding replication - do you mean synthetic relationships? So a short call position can be replicated using a short stock and short put. And a short put can be replicated with a covered call. Can you share a little more about your calculations i. Just so I can try and understand more about the question. Btw - what is this course you are doing? Sounds tough for a beginner class ;- Hi Peter, You are super. Btw, i also got confuse on the option replication. Am i right to say to replicate a short call, you lend out money and short call shares of stock? For replicating a short put, you actually borrow money and buy put shares of stock? However, for replicating a long call, you lend out money and buy call shares of stock while for replicating a long put, you borrow money and short put shares of stock. Is my concept and understanding correct? Bank A has no other forms of debt. The deposit insurance coverage is for 1 year and the fixed premium can is at 50 basis points per dollar insured deposit. The question is how much is the total dollar value of this subsidy by using the BS formula. And why the level of the interest rate does not have any effect on the answer? I have attempted to solve it and the calculation on put option price is And if i change the interest rate, then the put option price also change subsequently. Hi Steve, The most likely candidate is a drop in implied volatility - a decrease in interest rates will also cause a drop in the price of an option although the effect is minimal compared to IV. Hi Joe, I would say that the answer is A - assuming that the option in question for the stock and the future is the same i. As there are no dividends paying on the stock the one year forward price for the stock will equal the one year future price. Hi all, I just wonder what would cost the price of a stock decreases significantly while the price of tis put option also decrease. Is this due to sudden decrease in the hedge ratio? Anyone know how to deal with this question? Use the Black and Scholes option pricing model to make judgement on the following statements. Assume that there are no trnsaction costs or other cost. In the even of a short call assignment your broker will borrow stock on your behalf, which will be sold to the option buyer upon exercise. You will then have a short position in the stock until you buy stock to cover and pay borrow costs aka stock borrow. Peter, You are correct sir. I was thinking about buying a put. I have Nok shares. Thanks again and have a nice weekend. I really appreciate the explanation and the spreadsheet is great. Just what I needed. If you are short naked the call and it expires worthless stock below the strike then there is no action to take - the premium received when you sold it is your profit. You will then have a "short" position in the stock until you buy back the stock to cover while paying interest on the borrowed stock. Do I have to do anything to close it out or just leave it there until it expires? As always, thanks for your expertise. Nope - you can buy to open the same contract in the same month straight away. The same as if you were trading a stock; you can buy to open, sell to close and repeat as much as you want - or until you run out of funds ;- So if I sell to close a contract and made a profit, do I have to wait one calendar month if I want to purchase the same contract again? I am currently using TradersHelpDesk trading method to trade options. Hi Sally, "Buy to open" is when you establish a new position in a security. In your case, you would have initially been flat no position and after "bought to open" would be long a put option. So, you would want to go long Total and short Shell? Using options to do this instead of the stocks outright would be to use synthetics. Not sure if there are any other strategies suited for this? Thanks you are great. Hi Satish, Yes 2. Most likely - it depends options the broker. Interactive Brokers, for example, allows you define your account in another currency. You can also perform foreign currency transactions within your account for other countries that they support. For your other questions, you will need to read up on the relevant tax treaties between India and the US; India and US Tax Treaty Hi, Iam a Resident of the India -Bangalore. I have few queries before investing in US Stock Market Equities. Would be greatful if u get me this information. Hi Peter, Your tutorials and the excel files you have given are immensely useful. And you do all this for free. God bless you Thanks for the fantastic site. I never click banner ads but I do on this page with the hopes that it helps maintain this great resource. Hi Wayne, If you sell the option back before the expiration date then it is a manual transaction - i. If the option expires and it is in-the-money then the sale of the option is automatic. Hi Peter, Thx for the last answer, When you sell back a call early, is it an automatic sale, like mutaul funds or when a buyer buys it? Hi Wayne, Your net profit in both cases should be the same. The difference is that in the second example, you will need more capital to take delivery of the stock once it has been exercised. At the expiration date, the option will be worth the trade value, which will be the stock price minus the strike price. So if you exercise the option, you essentially sell the option at zero to close it and then take delivery of the stock at the strike price. Then you sell the stock back in the market to make the profit. What would my net be approximately? Hi Raghavendra, the historical volatility spreadsheet downloads the data from Yahoo only. In the historical-Volatility calculator, how can I import Nifty Futures. The Excel gives spot prices. But I want it for Nifty futures, which I want to import from NSE site, from the link link Please let me, how to do it. Hi, Ive been learning to trade options and futures for over a year and im ready to begin. However ive found that with my current broker im not allowed to trade futures at all and they only want to allowed covered options strategys. Check out the page on option value for a deeper explanation. The reason I ask is this: I plan to buy a fairly ridiculous number of call option contracts - pretty cheap. I can sell the contracts back, yes? Patrick Hi Kanchan, a pricing model depends on the style of option e. NIFTY trade European style and stock options are generally American style. For European options you can use a Black Scholes Model and for American options you can use a Binomial Model. Can some one please guide me where I can learn when time to enter the trading? Great information on options, what kind of strategies can be used in this volatile climate especially on instruments like Can Yes, take a look at the article on the Binomial Model. Any potential gains due to movements in the underlying price need to be enough to outweigh the effects of time value and changes in implied volatility. Having said that, however, if the price movement you mentioned occurred very quickly, say, over one day then you will most likely still make money on that option. Say I have bought a call option contract with strike at a premium of 15 and qty on 03rd Sept, whereas the current index level is Now if the index moves till do I still make money? Considering that the index has not cross the strike level of buy level? I think a simple "buy" and "sell" is enough. I mean, if you own shares in MSFT and you want to get rid of them I think it is clear enough that you would "sell" MSFT. You have the "option" to buy it. If the option contract is worth more in the market than what you paid for it, then you can simply sell it back and make the same profit then you would if you went and "exercised" the option and purchased and sold the stock. I downloaded your Option trading worksheet. It is very useful. Thanks for your effort. They are Australian based so the information would be focused on ASX listed stocks I would imagine. Hi Peter, have been looking at doing an options trading course that covers in details charting techniques. Have spoken to past students who have had some good success with writing covered calls. Both NSE and BSE are order driven markets where there is no official recognition of a market maker. There are firms making markets on options in India, however, their details may be hard to find. You might want to contact the NSE directly and ask them. Alternatively, you could reach out to your local broker. A good video options course is the Option Income System an online video series. You mean like a Long Condor or Short Condor? Hi Jan, Here are some option recommendation services; Option Sizzle Index Option Trader Call Writer Hi Sandy, Your broker should provide a platform with options functionality. I am new at this. Hi Gerry, If you own options stock and sell a call and a put at the same strike i. Gerry: You may want to go through whatever theoretical courses that you have taken a few more times. Over time, you will lose your shirt. For example, MSFT was selling for around the time of your post. HiI have some questions relating to optionswhich I dont seem to find answers tomaybe you could help. If I own stocksay MSFTand sell a call option for strike price 29pocket the premium I understand this obliges me to sell the share at Then if I sell put option for strike price 29pocket the premium I understand this will oblige me to buy share at Is this a viable strategy? I cannot see a down side but I have only theoratical experience with options. Thanks all Thanks for you quick response, I gone on to the Savi website but they do not appear to provide tutelage in options. My where interest is in options. Though if you try any of them let me know and I can pass on the feedback via the site. Please admin, I know nothing about share trading, futures and options, but I hold a masters degree in real estate finance and I am most willing to learnin particular options trading so I can make myself trade better life, Please can you kindly recommend a good tutelage program or course for me so I can educate myself where make this life I dream about a reality. I am willing to devote total time, energy and al m y resources to tjhis as I have been advised by my sister in Canada to learn about options trading to make my income from there. I know some background knowledge about options, futures and shares but that is all there is to it. Please kindly recommend me good tutelage or good program to educate me to the standard I want, Please. Please bear in mind I am a novice but a quick learner, I will like some practical and theoretical program to enable get myself this new career. Many thanks Can you please elaborate - is something not clear? I am open to suggestions on how to improve the content. Your option strategies are not creating the doubling or tripling account values as some of your other news letter buddies claim in their sites. AR Hi Kam, yes, you can do whatever you want to the spreadsheet. The VBA code is not protected, so just open up the VB Editor and change the code all you like. You can use the Implied Volatility functions in the workbook for that. Then, you would have to implement your own fitting logic to define a curve around these points. Once you have that, you can use each discrete point as your volatility input for your option model. Hi, I just downloaded the excel spreadsheet. I have 2 questions Is it possible to modify the model from Black Scholes to Whaley American Futures options? How can I give a skew to the volatility for OTM options and be able to manually shift it and modify the slope? When I opened up my first brokerage account my first trades were in orange juice and lean hog futures. Then I traded stock options on US equities before I actually did any electronic trades in stocks. Hi, I want to where into stock trading, can I start by going into option trading right away? Especially the Tips tab. Thanks for getting it right. I love the spreadsheet. Im still needing a U. If you do try it out, let me know your findings. Hi Marie, Hard to say. Possible sure, but difficult to say without knowing more about their strategy. Could you elaborate a little more on how they expect to achieve this? Or provide the web address of the said company? One company offers to double your money in three months investment in otions trading, they say that their risk is very mininal. Is this possible, or could they be legitimate? Traders can now choose options, not only on stocks, but on indicies, commodities, foreign exchange and exchange traded funds ETFs A big factor in moving traders from traditional stock trading over to options is the leverage options can provide over the underlying instrument; and depending how you structure a trade, your entire risk per trade can be capped at a per-determined amount. Options What are Options? Where are Options Traded? Option Types Option Style Option Value Volatility Time Decay In-The-Money? Payoff Diagrams Put Call Parity Weekly Options Delta Hedging Options Asset Types Index Option Volatility Option Currency Options Stock Options Comments Peter September 1st, at pm Hi Dave, Sorry for the late reply here. Dave August 27th, at pm I have sold a naked put option for 10 contracts. Dave Peter June 30th, at pm Hi Nathan, Deep in the money call options will have a delta of 1, meaning that the price of the option will move 1 to 1 with the price of the stock. Nathan June 30th, at pm I purchased an in the money call option that is now deep in the money. Nathan Faisal June 27th, at am Dear Sir, I am trading in Indian market my doubt is follows I have a query on Option delta. Thank you, Anu India Peter April 3rd, at am Hi Steve, Regarding replication - do you mean synthetic relationships? Sounds tough for a beginner class ; Steve April 2nd, at pm Hi Peter, You are super. Peter April 1st, at pm Hi Steve, The most likely candidate is a drop in implied volatility - a decrease in interest rates will also cause a drop in the price of an option although the effect is minimal compared to IV. Peter April 1st, at pm Hi Joe, I would say that the answer is A - assuming that the option in question for the stock and the future is the same i. Steve March 29th, at pm Hi all, I just wonder what would cost the price of a stock decreases significantly while the price of tis put option also decrease. Joe March 29th, at pm Anyone know how to deal with this question? You will then have a short position in the stock until you buy stock to cover and pay borrow costs aka stock borrow OptionRookie March 26th, at am Peter, You are correct sir. Nick March 21st, at am Thanks Peter. Peter March 14th, at pm If you are short naked the call and it expires worthless stock below the strike then there is no action to take - the premium received when you sold it is your profit. Peter March 8th, at pm Nope - you can buy to open the same contract in the same month straight away. The same as if you were trading a stock; you can buy to open, sell to close and repeat as much as you want - or until you run out of funds ; OptionsRookie March 8th, at am So if I sell to close a contract and made a profit, do I have to wait one calendar month if I want to purchase the same contract again? Peter March 8th, at am Yep - a wash sale can apply to any financial security. OptionRookie March 7th, at pm Hello Peter, Quick question for you. Does can wash sale apply to options? Bill November 4th, at am I am currently using TradersHelpDesk trading method to trade options. Peter October 29th, at am Hi Sally, "Buy to open" is when you establish a new position in a security. Someone please explain What is Bought to Open Put? Peter July 30th, at am Hi Satish, Yes 2. For your other questions, you will need to read up on the relevant tax treaties between India and the US; India and US Tax Treaty Satish July 29th, at pm Hi, Iam a Resident of the India -Bangalore. Venkatesh July 7th, at am Hi Peter, Your tutorials and the excel files you have given are immensely useful. God bless you JB April 15th, at pm Thanks for the fantastic site. Peter March 29th, at pm Hi Wayne, If you sell the option back before the expiration date then it is a manual transaction - i. Wayne March 29th, at pm Hi Peter, Thx for the last answer, When you sell back a call early, is it an automatic sale, like mutaul funds or when a buyer buys it? Peter March 28th, at pm Hi Wayne, Your net profit in both cases should be the same. Peter February 26th, at pm Hi Raghavendra, the historical volatility spreadsheet downloads the data from Yahoo only. Raghavendra February 25th, at am In the historical-Volatility calculator, how can I import Nifty Futures. Peter January 23rd, at pm Try Interactive Brokers tom January 21st, at am Hi, Ive been learning to trade options and futures for over a year and im ready to begin. Patrick Peter December 27th, at pm Hi Kanchan, a pricing model depends on the style of option e. For European options you can use a Black Scholes Model and for American options you can use a Binomial Model kanchan December 23rd, at am do u have any excel pricing model for Indian options? Peter December 20th, at pm Hi Danielyee, When to enter the market all depends on your view of the stock. Adil Siddiqui October 27th, at pm Great information on options, what kind of strategies can be used in this volatile climate especially on instruments like Gold Peter October 4th, at am Yes, take a look at the article on the Binomial Model Bruce October 3rd, at pm Do you have any excel pricing model for American options? Thanks, Options July 29th, at am Hey. Peter June 16th, at am Thanks for the feedback Jean, much appreciated! Jason May 10th, at am Hi Peter, have been looking at doing an options trading course that covers in details charting techniques. What are some good cheap options trading courses? Peter February 15th, at pm You mean like a Long Condor or Short Condor? Peter February 14th, at pm Hi Jan, Here are some option recommendation services; Option Sizzle Index Option Trader Call Writer Peter February 7th, at pm Hi Sandy, Your broker should provide a platform with options functionality. Peter January 31st, at pm Hi Gerry, If you own the stock and sell a call and a put at the same strike i. Gerry December 17th, at am HiI have some questions relating to optionswhich I dont seem to find answers tomaybe you could help. Thanks all damien December 17th, at am Thanks for you quick response, I gone on to the Savi website but they do not appear to provide tutelage in options. Many thanks Peter November 29th, at pm Can you please elaborate - is something not clear? ARVIND TRIPATHI November 29th, at am You should provide the basic definition first. Peter October 4th, at pm Have you had any success with such newsletters? AR October 4th, at pm Your option strategies are not creating the doubling or tripling account values as some of your other news letter buddies claim in their sites. AR Peter September 6th, at pm Hi Kam, yes, you can do whatever you want to the spreadsheet. Kam September 6th, at pm Hi, I just downloaded the excel spreadsheet. Tony August 19th, at am Hi, I want to get into stock trading, can I start by going into option trading right away? Peter March 18th, at pm From their website it seems as though MetaTrader only supports Futures, FOREX and CFDs. Shawna May 17th, at am Great information, thank you. Jeremy April 10th, at pm I love the spreadsheet. Admin March 22nd, at am Not yet Greg. I will add a Binomial option pricing model soon. Greg March 20th, at am Do you have a spreadsheet that price American-style options? Admin September 30th, at pm Hi Marie, Hard to say. Marie September 29th, at am One company offers to double your money in three months investment in otions trading, they say that their risk is very mininal.
How To Make $2,400 Every Day Within 15 Minutes Day Trading Options
How To Make $2,400 Every Day Within 15 Minutes Day Trading Options
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