Put and Call Option Secrets » Option

Option Spread Strategies: Trading Up, Down, and Sideways Markets (Paperback)

admin — Wed, 20 Jan 2010 16:28:36 +0000

Review

“An excellent guide for learning how to trade option spreads. Saliba offers in-depth discussions on how and when to employ these advanced strategies and to manage the risk of each position.” Peter LipskyTrader, Pan Capital

Saliba is back with the best option trading strategies for all markets, whether they are trending up, down, or sideways. Exercises and quizzes are included to reinforce lessons throughout the book.

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A Course in Option Trading Fundamentals with Joseph Frey (2004)

admin — Sun, 17 Jan 2010 14:43:39 +0000

This 87 minute video shows how Options provide investors and traders with an abundance of strategy alternatives than simply going long the market. However, using options effectively requires that you learn to think in a new way. Join PHLX’s Options Industry Council instructor Joe Frey as he introduces you to options strategies that allow you to participate in a sharp market move with limited risk, to take advantage of time decay in slow moving markets, how options pricing is affected by the underlying stock, and finally how to trade options with realistic expectations. An essential primer for all option traders of all levels.

With stocks, traders have just two main alternatives – buy or sell. But trading options offers investors so many strategic choices that it’s the fastest growing area on the investment horizon.

Now, this fast moving presentation from respected Options Industry Council instructor Joseph Frey provides a comprehensive overview of options trading — (more…)

Trading Option Greeks: How Time, Volatility, and Other Pricing Factors Drive Profit (Hardcover)

admin — Mon, 11 Jan 2010 18:38:20 +0000

Review

“A must-read for individuals who are serious about trading options” — James Bittman, author, Trading Options as a Professional”Dan’s book is a primer for options aficionados. Without bogging you down with super-heavy math, he walks you through the key principles and shows you what matters the most to your trading portfolio.” — Fari Hamzei, founder, Hamzei Analytics, LLC

Review

“A must-read for individuals who are serious about trading options.”—James Bittman, author, “Trading Options as a Professional”“Dan’s book is a primer for options aficionados. Without bogging you downwith super-heavy math, he walks you through the key principles and shows youwhat matters the most to your trading portfolio.”—Fari Hamzei, founder, Hamzei Analytics, LLC

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Option Profits Success System Review

admin — Sat, 09 Jan 2010 03:53:57 +0000

When you are first starting out in any kind of venture it can be very intimidating, and with trading this is no different. If anything it can be even more daunting because you have to invest your own money and at times the financial markets can be very confusing. Options’ trading is one such type where your investments can bring you great profits but where there is also a lot of risk involved. The best idea you can have is to enrol onto an Options trading course in order to educated yourself and there are many out there, although the best I have come across is A.J Brown’s Option Profits Success System. When you decide that trading options is the way forward for you and your trading career, you must also make sure that you really have the right knowledge as well as the best trading strategies possible, for without these, you are not giving yourself much of a chance. This is why it is so important to get as much information as you can from others who have been in your position. AJ Brown, for example started off as a rookie with no more then $5000 to invest and because he had the right trading strategies ended up turning this investment into nearly a million in 30 months. The first step to options trading is of course, knowing exactly what an option is. An option is a contract where the buyer is given a right to buy or sell an underlying asset (like a stock) at a certain price before a specific date; however, they are under no obligation to do so. In this way, an option is just like a stock or a bond, where there is a binding contract where terms and properties are strictly defined. The next step is to be able to identify the two different types of Options, which are Call Options and Put Options. Trading Trainer Option Profits Success System not only provides you with all kinds of useful facts like these but will give you the low down on all kinds of strategies that will help you to become the successful options trader you desire. You should know that a Call Option is a contract that will give the buyer the right to buy up stock shares at a certain price, otherwise known as a strike price, on or before a specific date expires. Whereas a Put Option is where the owner has the right to sell a certain number of stock shares at a specific price, again on or before a specific dates expires. When you have paid a certain amount for an option, this is known as the premium which can then be split up into time value and intrinsic value. This is just giving you a beginner’s insight into options trading but should you (and believe me you should) want or need more information then you should look no further then A.J Brown and his Trading Trainer community. Here you will find countless facts that can only go towards helping you make you trading career more of a success, not to mention the fact of A.J Brown’s reputation as an excellent mentor and teacher. One of the best pieces of advice that you can be given is to do research and more research before enrolling or making a purchase of any kind of options trading product, whether or not this research involves reading many Option Profits Success System reviews or reading countless profiles on A.J Brown and his previous products.What Do You Get?

This may sound like you are getting rather a lot, but believe me, it is all vital for giving you the world class education that you need to trade stock options. As a step by step guide, the Option Profits Success System will get you to the desired place where you know, in detail, more about trading stock options then the majority of other traders out there. This home study course will put you well on course to a successful and long term career in stock option trading – Guaranteed!

Option Volatility & Pricing: Advanced Trading Strategies and Techniques (Hardcover)

admin — Tue, 05 Jan 2010 12:23:27 +0000

One of the most widely read books among active option traders around the world, Option Volatility & Pricing has been completely updated to reflect the most current developments and trends in option products and trading strategies. Featuring: Pricing models Volatility considerations Basic and advanced trading strategies Risk management techniques And more! Written in a clear, easy-to-understand fashion, Option Volatility & Pricing points out the key concepts essential to successful trading. Drawing on his experience as a professional trader, author Sheldon Natenberg examines both the theory and reality of option trading. He presents the foundations of option theory explaining how this theory can be used to identify and exploit trading opportunities. Option Volatility & Pricing teaches you to use a wide variety of trading strategies and shows you how to select the strategy that best fits your view of market conditions and individual risk tolerance. New s (more…)

Option Theory and Trading: A Step-by-Step Guide To Control Risk and Generate Profits (Wiley Trading) (Hardcover)

admin — Sat, 02 Jan 2010 20:50:53 +0000

Praise for Options Theory and Trading “I’ve had the pleasure of teaching with Ron Ianieri at numerous live seminars for traders and investors, and one thing is for sure-Ron knows options! Now Ron has created a thorough, easy-to-read guide that you can benefit from in many ways, whether you are experienced in options trading or just starting out. I believe you will find Options Theory and Trading like Ron himself . . . full of knowledge, entertaining, fast-paced, and a joy to be around.” —Price Headley, CFA, CMT, founder of BigTrends.com “I’ve had the pleasure of knowing and working with Ron for many years now. When managing funds in our asset management company, Ron has always been our ‘go-to guy’ on anything options-related. I’ve also taught a number of seminars side by side with Ron over the years where I’ve always come home knowing more about options than when I left! The man is truly the ‘pitbull’ of derivatives.” —Peter Reznicek, Chief Equi (more…)

Option Trading Explained – In Layman Terms

admin — Mon, 28 Dec 2009 03:13:32 +0000

Robert Kiyosaki says that Option Trading is the investment of the rich.
Indeed, option trading is the most versatile form of investment in the world today. Its versatility has been the topic of many speakers all over the world. Terms such as “Covered Calls” and “Credit Spreads” have become well known amongst traders new and veteran alike.
Option Trading Explained – Simply put, it is the trading of option contracts on a particular stock.
Options Explained – A contract that allows you to sell or buy a stock at a predetermined price within a set time frame.
There is enough material written explaining the technical make up of an option and I shall not dwell into it further in this writing. The purpose of this writing is to explain to you what the effects of option trading is. … let’s go into Option Trading Explained!
Option Trading Explained – What Can Stock Options Do?
Let us first examine the effects of this thing called stock options. Knowing all the effects of stock options allows us to better understand why it is such a celebrated investment tool and also why so many people go bust doing it. Let’s start from the Positive Effects of stock options.
Stock Options are:
Leverage. It allows you to control more shares (100 shares per option) with the same amount of money thereby exponentially increase your returns per dollar.
Discount. Just as you control more shares with just one option, you will then be able to control the same amount of shares with lesser money than before.
Protection. It allows you to protect the stock you hold by owning the right to sell them at a predetermined price no matter what happens.
Regardless of market direction. It allows you to profit from both upward and/or downward moves in the stock.
Creative. It allows you to put different types of options together to form all sorts of investment positions. It can even make money no matter which way the market goes.
And the Negative Effects are:
No value beyond expiration. You can potentially lose all your money along with the expiration of the option.
Negative Leverage. Just like it can amplify your gains, options will also amplify your loses.
Time Decay Effect. Options reduce in value over time and sometimes can completely obliterate any gains from movement in the underlying stock.
Looking at the above effects, it is clear that Option Trading indeed is an extremely versatile investment tool that allows its investor to profit from any market direction, protect his/her stock positions, reduce capital commitment and lots more, based on the way it is utilized.
Conversely, once such power of leverage is being abused, the investor could then lose everything he/she have put in by expiration or lose more from the same stock move than he/she is comfortable with. Also, by holding on to Options, time decay sometimes can obliterate your profits if the movement in the underlying stock is not big enough.
Therefore, investing in options requires careful planning on the part of the investor. You must know for what effect are you using options for and how much you are putting at risk. In essence, using options for Leverage confers the highest risk and the highest rewards and demands that you use only proven strategies with a proven track record.
Using options creatively even allows us to structure investment positions to reap a fixed monthly return that beats the market regardless of which way the market goes! Just like in the Ride the Flow System offered at http://www.mastersoequity.com/MOE_ridetheflow.htm . Where your capital can be fully protected no even if the market enters a severe drop. Sounds amazing?
Option Trading Explained – Conclusion
I hope this “Option Trading Explained” has given you a good overview of the effects of options.
For a full and complete education in option trading, please visit http://www.mastersoequity.com/OptionUni.htm

Trading Stock Options: Basic Option Trading Strategies And How I’ve Used Them To Profit In Any Market (Paperback)

admin — Sun, 27 Dec 2009 11:32:53 +0000

In Trading Stock Options, experienced option trader Brian Burns, explains the basics of stock options and shows you how to trade the most successful option strategies. As you begin your journey on the option path, you’ll have the luxury of real-life trade examples to show you the way. The diagrams and charts help turn the complex world of options into easy to visualize and simple to understand strategies that even the most novice of traders can utilize. Trading Stock Options will show you how you can use options to: * Get paid to buy and sell your favorite stock * Purchase stocks for less than their current price * Buy insurance on stocks in your portfolio * Profit when stocks lose value * Perform short-term trades with less money than trading the stock From the Introduction “Through my experiences with option trading, I have tried almost every strategy I could find. In this book, I will be discussing the strategies that I use the most and feel are the bes (more…)

Comparing Fixed Rate, Hybrid Arm, Pay Option Arm And Hybrid Option Arm Mortgages

admin — Sun, 27 Dec 2009 03:40:56 +0000

With all of the options available to homeowners today, adjustable rate financing is a common topic of discussion at our offices. The 3 most popular Adjustable Rate Mortgage (ARM) types today are Hybrid ARMs, Option ARMs, and Hybrid Option ARMs. Sound pretty similar don’t they? There are similarities, that’s for sure, but there are differences as well.
Hybrid ARMs
Hybrid ARMs are a cross between a traditional fixed rate mortgage and a classic ARM. They generally come in varieties indicating how long they are fixed for, and how often they adjust thereafter. For example, a 3/1 ARM will have a fixed rate for the first 3 years, and can then adjust once every year thereafter. A 2/1 would be fixed for years and adjust every year thereafter, a 5/1 fixed for five years, 7/1 for seven and a 10/1 for ten.
All adjustable rate mortgages are calculated using an index, such as the MTA, the COFI, the COSI or the LIBOR. MTA and LIBOR are most popular. These rates indicate a basic borrowing cost of capital for the lender, this is how much it costs them to lend money in a perfect world. They also have a margin, which is like a risk premium, their profit for making the loan.
Hybrid ARMs have basic characteristics including:
1. Start Rate which remains fixed for X amount of time, so a 3/1 lasts 3 years and adjusts every year thereafter
2. Adjustment Cap Structure which dictates how much the rate can change when the loan begins adjusting. A 5/1/5 adj. cap structure means that the 1st time the rate adjusts it can go up or down 5 points max, any subsequent adjustments are limited to 1 point up or down, and the rate can never go up or down more than five points.
3. Floor: a rate which the note rate or fully indexed rate can never be lower than. (usually the initial fully indexed rate)
4. Ceiling: a rate which the note rate or fully indexed rate can never go higher than (usually 9.95 to 11.95 depending on lender and index)
The minimum payment on a 100,000 dollar regular Hybrid ARM with a 7% rate would be a bit over 665 dollars, and borrowers of all credit levels qualify for Hybrid ARM type mortgages.
One Month Option ARM
Option ARMs are one of the most popular loan types in today’s market, and for good reason. Option ARMs are like regular ARMs, but they have 4 payment options instead of just the one fully amortized payment option on a regular mortgage. The minimum payment option is the main point of attraction for majority of the Option ARM customers in the USA today, because it allows them to make smaller payments when cash is tight. The minimum payment for the initial period of the loan for 100,000 dollars would be 322 dollars, versus 665 dollars for the full payment on a conventional mortgage. A great option for the self employed, the small business owner.
On 1 month option arms, they adjust every month after the initial period, so if the initial period is 6 months or 1 year, then every month therafter the rate adjusts. There are 6 month and 1 year option arms wherein the payment adjusts every 6 months or 1 year thereafter as well, however 1 mo arms are most popular. They have additional features in addition to standard Hybrid ARMs:
6. A Minimum Payment: a payment which like a credit card allows you to stay current on the mortgage without paying the full amount of interest due, referred to as deferring interest
7. A Minimum Payment Adjustment Cap: the maximum amount that the minimum payment AMOUNT can increase or decrease in a given period. Typically 7.5%. So if your minimum payment is 1000 dollars, then in the next period it can not go higher than 1075 dollars.
8. a Negative Amortization Cap: This is the maximum the loan balance is allowed to increase due to deferral of interest (making the minimum payment only) before the loan is re-cast and the minimum payment option goes away. Depending on state and LTV this is 110% to 120% of the loan amount.
Option ARM Example: On a $100,000 Option ARM with a 1% start rate, a base or index rate of 4% and a margin of 4%,
- Minimum Payment = 322
- Interest Only = 667
- Deferred Int. = 345 (IO minus Min Pay)
- 1 Year Neg. Am. = 4140
- Recast Balance = 115000 (assuming 115% neg-am cap)
- Months to Recast= 43 (assuming you only make the minimum payment)
When a regular option arm exceeds its negative amortization cap and recasts (typically in 3 and half to 4 years if you’re only making the minimum payment) the minimum payment option goes away, and you are left with the fully amortizing payment, although some products are beginning to extend the availability of the interest only option for up to 10 years. Because of the incredible flexibility of these loans, they are limited to higher credit borrowers (generally a FICO score of 660 is required, however certain programs are available for borrowers with FICOs of 600 or better).
Hybrid Option ARMs or Fixed Rate Option ARMs
Hybrid Option ARMs combine some the best features of Hybrid ARMs, such as medium term fixed rates, with the best aspects of Option ARMs, such as low minimum payments, while solving a lot of the problems with both for the average borrower. They are most popular with homeowners who want the stability of a fixed rate mortgage but the option to make very, very low minimum payments, and are considered an ideal compromise between “safety” and “flexibility” in the mortgage world.
Hybrid Option ARMs are generally based on normal Hybrid ARMs, in that their initial period is usually 3/1, 5/1, 7/1 or 10/1 meaning 3, 5, 7 or 10 years where the rate and minimum payment stays fixed, and 1 adjustment per year afterwards.
However they have Option ARM like features such as a minimum payment, minimum payment adjustment cap, and neg am cap.
Using the above example the same loan amount in a typical hybrid option arm package
- Minimum Payment = 449 (assuming 3.5%)
- Interest Only = 583
- Deferred Int. = 134 (1/3 of regular option arm)
- 1 Year Neg. Am. = 1608
- Recast Balance = 115000 (assuming 115% neg-am cap)
- Months to Recast= 112 (assuming you only make the minimum payment)
Also, when hybrid option arms recast, most of them allow for an Interest Only option instead of forcing the borrower into a fully amortized payment they might not be able to afford. Along with the long recast timeframes and the fixed rates for the initial period, this substantially reduces payment shock on recast.
Wrapping Up
So we’ve discussed Hybrid ARMS, Option ARMs, and Hybrid Option ARMs, and will provide a variety of real world examples and detailed treatment of relevant topics in other articles in this series. And as always we welcome your questions and calls.

The Benefits and Risks of Selling a Lease Option on Your Home

admin — Fri, 11 Dec 2009 02:42:47 +0000