BUY 2 LOTS 210 CALL @4
BUY 1 LOT 180 PUT @3
Total investment=22000
Pay off table:
Saturday 2 April 2016
Thursday 31 March 2016
CASH-SECURED PUT OPTIONS
SELLING
NAKED PUTS
Selling puts is not a high-risk strategy. It is no more risky than buying stock.
Despite everything you may have heard to the contrary, put selling is a strategy worthy of consideration by almost every investor who buys stock. The very bullish trader who expects to see a large upward change in the stock price represents the single class of investor who should not sell puts.
PRUDENCE
The so-called "prudent investor" is told that buying stocks is a good and conservative investment idea. That investor is also told that selling put options is far too risky. Let's compare two investors who make a trade today:
· The stock buyer pays for the investment in three days, when the trade "settles." If the stock price moves higher, the trader earns a profit. If the stock price declines, the stockholder incurs a loss. Very straightforward and easy to understand.
· The put seller collects cash upfront when making the sale. He/she puts up collateral (to meet the margin requirement) to guarantee his/her ability to pay for the stock -- if and when it becomes necessary. If the option expires worthless, the collateral is released and the trader keeps the cash premium as the profit.
In other words, the stock buyer pays for shares at the time of the trade and the put seller promises to pay for stock at a later date. They each have the same risk: If the stock price undergoes a steep decline, each loses money. This is not a risky proposition for the put seller who understands that he must not sell more than one put for each 100 shares he is willing to own.
Selling too many puts is a risky proposition, but selling too many represents poor risk management skills by the trader. it is not a reflection on the prudence of the strategy.
The put seller agrees (a binding contract) to pay $30 (the strike price) for shares at a later date, but only if he is required to do so. He collects $100 (premium, or option price) for accepting this obligation. If the stock rallies, both earn a profit. However, the stock holder's potential gain is unlimited while the put seller cannot earn more than the $100 premium that he collected.
Selling puts is not a high-risk strategy. It is no more risky than buying stock.
Despite everything you may have heard to the contrary, put selling is a strategy worthy of consideration by almost every investor who buys stock. The very bullish trader who expects to see a large upward change in the stock price represents the single class of investor who should not sell puts.
PRUDENCE
The so-called "prudent investor" is told that buying stocks is a good and conservative investment idea. That investor is also told that selling put options is far too risky. Let's compare two investors who make a trade today:
· The stock buyer pays for the investment in three days, when the trade "settles." If the stock price moves higher, the trader earns a profit. If the stock price declines, the stockholder incurs a loss. Very straightforward and easy to understand.
· The put seller collects cash upfront when making the sale. He/she puts up collateral (to meet the margin requirement) to guarantee his/her ability to pay for the stock -- if and when it becomes necessary. If the option expires worthless, the collateral is released and the trader keeps the cash premium as the profit.
In other words, the stock buyer pays for shares at the time of the trade and the put seller promises to pay for stock at a later date. They each have the same risk: If the stock price undergoes a steep decline, each loses money. This is not a risky proposition for the put seller who understands that he must not sell more than one put for each 100 shares he is willing to own.
Selling too many puts is a risky proposition, but selling too many represents poor risk management skills by the trader. it is not a reflection on the prudence of the strategy.
The put seller agrees (a binding contract) to pay $30 (the strike price) for shares at a later date, but only if he is required to do so. He collects $100 (premium, or option price) for accepting this obligation. If the stock rallies, both earn a profit. However, the stock holder's potential gain is unlimited while the put seller cannot earn more than the $100 premium that he collected.
Wednesday 30 March 2016
OPTIONS FOR BUSY INVESTORS
MARCH 31, 2016
LAST DAY FOR HOLI OFFER..!!!!
OPTION STRATEGIES FOR LONG-TERM INVESTORS
BOTH INVESTORS AND TRADERS CAN USE OPTIONS.
The generally accepted difference between investors and traders is that investors make portfolio changes far less often and that they have the time and patience to allow their investments to grow. In other words, investors are not interested in instant gratification whereas traders prefer to make a trade, collect a quick (a few minutes to perhaps a couple of weeks) profit and exit the position.
Traders seek stock-market profits by selling as soon as a profit target is met. They never get married to a position. Nor do they have loyalty to the company whose stock they own. They often ignore the nature of the company itself, relying on charts to make buy/sell decisions. Some traders own positions for as little as a few seconds, while others may wait as long as two months for a position to work.
There is also another major difference. Trading is a full-time job because there is a continuous need to monitor positions and to make important decisions.
Investing is something that anyone can undertake. Don't misunderstand. It is not a simple process. Instead it requires that an investor finds the time to do the necessary work for making important decisions. Unless you want to pay someone to manage your portfolio by buying mutual funds (a poor choice), ETFs (a good choice) or hiring a financial advisor, the successful individual investor does his/her homework.
INVESTORS tend to hold positions for years, decades, or even an entire lifetime. As a consequence, they make few investment decisions. Investor portfolios should be examined on a regular basis (at least yearly) with the goal of unloading stocks that no longer deserve a spot in the portfolio. Alas, that seldom happens and many buy and hold investors believe in holding forever.
Timing is not a big issue because paying a few cents more per share, has little effect on the long-term results.
LAST DAY FOR HOLI OFFER..!!!!
This HOLI add colors of profit in ur trades....!!!!!
Buy any 3 packages equity/mcx @10000 PM.
OR any one package @ 10000 quarterly
To pay visit
Call : 07225909997,08982086510
OPTION STRATEGIES FOR LONG-TERM INVESTORS
BOTH INVESTORS AND TRADERS CAN USE OPTIONS.
The generally accepted difference between investors and traders is that investors make portfolio changes far less often and that they have the time and patience to allow their investments to grow. In other words, investors are not interested in instant gratification whereas traders prefer to make a trade, collect a quick (a few minutes to perhaps a couple of weeks) profit and exit the position.
Traders seek stock-market profits by selling as soon as a profit target is met. They never get married to a position. Nor do they have loyalty to the company whose stock they own. They often ignore the nature of the company itself, relying on charts to make buy/sell decisions. Some traders own positions for as little as a few seconds, while others may wait as long as two months for a position to work.
There is also another major difference. Trading is a full-time job because there is a continuous need to monitor positions and to make important decisions.
Investing is something that anyone can undertake. Don't misunderstand. It is not a simple process. Instead it requires that an investor finds the time to do the necessary work for making important decisions. Unless you want to pay someone to manage your portfolio by buying mutual funds (a poor choice), ETFs (a good choice) or hiring a financial advisor, the successful individual investor does his/her homework.
INVESTORS tend to hold positions for years, decades, or even an entire lifetime. As a consequence, they make few investment decisions. Investor portfolios should be examined on a regular basis (at least yearly) with the goal of unloading stocks that no longer deserve a spot in the portfolio. Alas, that seldom happens and many buy and hold investors believe in holding forever.
Timing is not a big issue because paying a few cents more per share, has little effect on the long-term results.
Tuesday 29 March 2016
LAST DAY FOR HOLI OFFER..!!!!
This HOLI add colors of profit in ur trades....!!!!!!!!
Buy any 3 packages equity/mcx @10000 PM.
OR
Any one package @ 10000 quarterly
To pay visit
Call : 07225909997,08982086510
Monday 28 March 2016
THE IRON CONDOR TRADER'S MINDSET
HOW THE IRON CONDOR TRADER EARNS MONEY
Every option strategy comes with the possibility of earning a profit. There is also the possibility of losing money -- and that represents the risk of trading. Whenever you initiate a trade, you should have some expectation of the likelihood of incurring a loss when seeking the potential reward.
Most traders have a market bias -- they initiate a trade when expecting that the overall stock market (or at least the price of the individual stock being traded) will move higher or lower. Such traders adopt a bullish or bearish strategy.
Other traders have no specific bias. They look at the market in one of two ways:
· They have no opinion on market direction and by default, adopt market-neutral strategies.
· They expect a non-volatile, non-directional market and elect to adopt market-neutral strategies.
The iron condor is one such strategy.
Definitions
· Bullish Strategy: Earns a profit for the trader when the market moves higher.
· Bearish Strategy: Earns a profit when the market declines.
· Market-neutral Strategy: Earns a profit when the market trades in a relatively narrow range and all rallies and declines are small.
There is one other important consideration for traders:
Bullish and bearish traders earn money from market movement; i.e., they correctly predict whether the market rises or falls.
Market-neutral traders earn money from the passage of time -- but only when rallies and declines are small enough that they do not generate a loss that is larger than the positive time decay. Ideally, the trader waits for Theta to work its magic.
How Does a Trader Make Money from the Passage of Time?
Options are wasting assets, and (all else being equal) lose value every day. Theta measures the decay rate.
Traders who buy options must have their market opinions come true -- sooner rather than later -- or else the options bought will lose too much of their value while the trader holds onto the position and waits for his/her prediction to come true.
Option sellers don't have that problem. They make money every day -- unless the underlying asset (stock, ETF, index) moves too far in the wrong direction. [Call sellers do not want the stock price to rally and put sellers do not want the stock price to fall.]
Iron Condors: Risk and Reward
Let's examine a typical iron condor.
Buy 1 INDX Jan 16 '15 1240 call
Sell 1 INDX Jan 16 '15 1230 call (These two options form the call spread; premium $0.95)
Buy 1 NDX Jan 16 '15 1110 put
Sell 1 INDX Jan 16 '15 1120 put (These two options form the put spread; premium $1.05)
Let's assume that the premium collected is $2.00 per share, or $200 for one iron condor.
The Iron Condor Trade
The losing situation: When the stock moves too near the strike price of one of the options that you sold, its price increases rapidly and the iron condor loses money. Sometimes there is a good offset: If enough time has passed, and if the time decay is large enough to offset the entire increase in value, you may still have a profitable position.
When the trade is not working
If the index (INDX) price nears 1230 (the short call option) or 1120 (the short put option), the corresponding spread gains significant value and the whole iron condor position would cost more to exit than the $200 collected when the trade was originated. As a result, the position is losing money or is "underwater."
Every option strategy comes with the possibility of earning a profit. There is also the possibility of losing money -- and that represents the risk of trading. Whenever you initiate a trade, you should have some expectation of the likelihood of incurring a loss when seeking the potential reward.
Most traders have a market bias -- they initiate a trade when expecting that the overall stock market (or at least the price of the individual stock being traded) will move higher or lower. Such traders adopt a bullish or bearish strategy.
Other traders have no specific bias. They look at the market in one of two ways:
· They have no opinion on market direction and by default, adopt market-neutral strategies.
· They expect a non-volatile, non-directional market and elect to adopt market-neutral strategies.
The iron condor is one such strategy.
Definitions
· Bullish Strategy: Earns a profit for the trader when the market moves higher.
· Bearish Strategy: Earns a profit when the market declines.
· Market-neutral Strategy: Earns a profit when the market trades in a relatively narrow range and all rallies and declines are small.
There is one other important consideration for traders:
Bullish and bearish traders earn money from market movement; i.e., they correctly predict whether the market rises or falls.
Market-neutral traders earn money from the passage of time -- but only when rallies and declines are small enough that they do not generate a loss that is larger than the positive time decay. Ideally, the trader waits for Theta to work its magic.
How Does a Trader Make Money from the Passage of Time?
Options are wasting assets, and (all else being equal) lose value every day. Theta measures the decay rate.
Traders who buy options must have their market opinions come true -- sooner rather than later -- or else the options bought will lose too much of their value while the trader holds onto the position and waits for his/her prediction to come true.
Option sellers don't have that problem. They make money every day -- unless the underlying asset (stock, ETF, index) moves too far in the wrong direction. [Call sellers do not want the stock price to rally and put sellers do not want the stock price to fall.]
Iron Condors: Risk and Reward
Let's examine a typical iron condor.
Buy 1 INDX Jan 16 '15 1240 call
Sell 1 INDX Jan 16 '15 1230 call (These two options form the call spread; premium $0.95)
Buy 1 NDX Jan 16 '15 1110 put
Sell 1 INDX Jan 16 '15 1120 put (These two options form the put spread; premium $1.05)
Let's assume that the premium collected is $2.00 per share, or $200 for one iron condor.
The Iron Condor Trade
The losing situation: When the stock moves too near the strike price of one of the options that you sold, its price increases rapidly and the iron condor loses money. Sometimes there is a good offset: If enough time has passed, and if the time decay is large enough to offset the entire increase in value, you may still have a profitable position.
When the trade is not working
If the index (INDX) price nears 1230 (the short call option) or 1120 (the short put option), the corresponding spread gains significant value and the whole iron condor position would cost more to exit than the $200 collected when the trade was originated. As a result, the position is losing money or is "underwater."
Subscribe to:
Posts (Atom)