index options trading

Is selling stradle option on SPDR exchange traded fund(SPY) a good strategy?

Question by raj k: Is selling stradle option on SPDR exchange traded fund(SPY) a good strategy?
I am an individual investor who is currently using options on exchange traded funds for capital growth.I sell both put and call options on SPY (S&P500 index) close to the current market price. I also buy protective puts.I generally sell options two months out to maximise my return on investment. Can you advise me if it is a good and safe strategy?

Best answer:

Answer by anonymous
Sounds to me like you are a little more advanced than the teenagers on this site! I can not give you advice … can you give me some? Why not stocks? I am into [GW] Grey Wolf and [GE] General Electric. What are your thoughts?

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Q&A: Section 1256 contracts?

Question by moreno: Section 1256 contracts?
Hi,

I read that Section 1256 contracts tax treatment is different from the stock capital gain treatment. I have traded

some Index Options, and plan to look into other futures options next year.

In order to be treated with 60/40 tax treatment, other than the instruments need to be on the qualified list, does

the investor need to claim a trader status? Can a retail investor claim the preferred tax treatment only because one

happens to trade such instrument?

Best answer:

Answer by cohen
Trader status is not a prerequisite for 60/40 treatment. Only a couple of very limited exceptions prevent an individual from getting 60/40 treatment.

A reasonably understandable explanation of section 1256 contracts is contained in IRS Publication 550.

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What affects the skewness of the OPTION PRICE distribution?

Question by whoareyou: What affects the skewness of the OPTION PRICE distribution?
I’m thinking of trading on the skewness of the OPTIONS on S&P 500 index. I’ve read that it is good to initialise the trade when the skewness is very negative. Havig obtained a sample of the option skewness over a couple of years, I’m curious at what level the skewness needs to reach inorder to trade?

Best answer:

Answer by Oh Boy!
What type of trade do you want to put on? That will dictate whether skew is good for your position. For example, buying a put debit spread would be great if there’s lots of put skew but selling the same spread would be bad if there where lots of put skew.

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I have a question about investing in the stock market?

Question by GoodFella: I have a question about investing in the stock market?
I have 3 different accounts. A ROTH IRA, 401K at work, and a small trading account with a lost cost broker. I have a low cost index fund in the roth where most of my money is. I have the 401k invested in a mid cap fund. And with the trading account I plan to buy a few stocks or trade options to take profits here and there. Does this sound like a good investing plan???

Best answer:

Answer by greeter7
I do not know what a lost cost broker is. It sounds as if you need to find a broker who will and can help you. I suggest you shop around and find that person who satisfies your investments. That would be the person to question. Never rely on anybody whom you do not know well. God Bless. Greeter.

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SPX S&P 500 2010 Technical Analysis Bear Market Trading Video Pt 2

www.StockMarketFunding.com Pt 2 SPX S&P 500 trend analysis technical analysis professional commentary SPX S&P 500 Index SPX S&P 500 Index Weekly Analysis Stock Market Technical Analysis Options
Video Rating: 5 / 5

www.StockMarketFunding.com SPDR S&P 500 Index ETF (SPY) Technical Analysis Breakout by Clearing Major Resistance Chart TrendS&P 500 Index Technical Analysis Breakout by Clearing Major Resistance. The SPX.X broke through the long watched 1150 handle today as major technical resistance on a…
Video Rating: 5 / 5

Alternative ways to trade the Dow Jones Index?

Question by Trufflehunter_22: Alternative ways to trade the Dow Jones Index?
Currently I play around with DIA Options and might try e-mini futures but are there any other effective alternatives to swing trade the DJI that require smaller margins than the futures?

Best answer:

Answer by dredude52
I wish I knew. The wipsaws have gotten so wild, I can’t hardly stay with the trend anymore, or identify it.

I think there is a Double Diamond, but that’s still a far cry from the Dow futures, and I couldn’t live on that. I’ve traded the Dow for about 15 yrs, and hardly know it anymore. I would also rather swing trade, but it forces me to Day Trade.

It’s forced me to trade shorter and shorter time frames. I break it down now into the morning session from 9:30-11:30, and the afternoon session from 1:30 or 2:00-4:00.

I don’t trade the open, but I’m looking for a turnaround or confirmation of the open between 8:45-9:00 that will carry into lunch, then I get out.

Then after lunch, I’m looking for a breakout that will carry into the last half-hour turnaround. These are my “swing” trades now. Forget trying to hold overnight, unless a new trend has just blasted off.

I tried the index options for about a year, but the premium fluctuations were beyond reason. Or you can’t trade the breakouts, because the premium has already expanded, and it doesn’t move at all.

I switched over to trading the Forex in June, then mostly just watched as the Dow finally got into a trend after July. But I’ve made some money with the currencies; they trend better.

Speaking of which, you may look closer at trading the Russell 2000 mini. It seems to trend better than the Dow, and isn’t as wild. The volume has grown considerably, and it’s definately tradeable. Whenever I’m questioning the trend intraday, I look to the ER2.

Good luck.

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S&P 500 Index Plunges After US Hiring Drops September 2011 Technical Analysis

www.StockMarketFunding.com S&P 500 Index Plunges After US Hiring Drops September 2011 Technical Analysis. Weekly closing levels and market commentary on the S&P 500′s performance to the recent US Economic Jobs Report. The S&P 500 encountered resistance near the 1230 zone, which marks the…
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Q&A: Ways To Take a Leveraged Short Position on China?

Question by Hello1234: Ways To Take a Leveraged Short Position on China?
Ways To Take a Leveraged Short Position on China
Many people have asked me how to get short the Chinese market using maximum leverage and the only products I can think of are these:

FTSE/Xinhua China 25 Index Futures & Options
Hang Seng China H – Financials Index Futures
Hang Seng China Enterprises Index (H-Shares) Index Futures & Options
You can see from the average daily volume numbers (April 2007) that the liquidity is nothing to write home about, except maybe for the H-shares Index Futures (the H – Financials Index Futures just started trading on April 16 – early days).

If you have an account at Interactive Brokers, you should have access to these products. I’m not recommending you take a leveraged short position in any of these markets, just as I don’t recommend standing in front of a loaded freight train going 100 miles per hour.

Anyone have any brighter ideas than these?

Best answer:

Answer by gls_merch
Really you want to short the retail (domestic) A-shares. I think this is more difficult but you might be able to get an over-the-counter swap with an investment bank. That’s about the only bright idea I have beyond what you suggested, and not really executable except at the institutional level.

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Profiting from Binary Options Trading

Like anything worthwhile in life, option trading for a living requires a number of essential things. You need to have a plan, a trading system that matches the amount of trading capital you have. This plan should include a minimum gain per successful trade and a maximum loss per losing trade. It should also include position sizing, i.e. how much, or what percentage of your entire trading capital, you will risk on any one trade. You need to decide whether your trading style will be more speculative or longer term strategically focussed.

You should also know what methods you will regularly use to assess the future price direction of the underlying stock, commodity or index that your options are derived from. Will it be a “fundamentalist” approach – based on company reports and management? Or will you be a “technical analyst” – looking at charts for price patterns?

How will you match the approach you take with the option trading strategy of your choice?

For example, if you want to be a straddle trader, your focus might be on upcoming earnings reports, or on forming “symmetrical triangle” patterns in stock charts, along with low option implied volatility. If speculative trading is more your “thing” then you would be looking for support and resistance levels, drawing trendlines and looking for short term price breakouts using indicators of your choice.

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The very term – option trading for a living – implies reliance upon your trading profits as your main, or even sole, source of income. So before you take the plunge, you need to feel supremely confident that you can actually do this; that whatever system you plan to use will work in all market conditions and consistently over the long term. You need to be committed to ongoing learning, together with continued paper trading to test your strategies. In short, you must develop a passion for option trading.

Matching Starting Capital with Trading Style

If you only have a small amount of capital to begin with, you should quickly dispel any thoughts of option trading for a living… for now. Keep your job and think of your trading activities as only a means to increase your trading capital base over time. Once you have at least ,000 then you’re in a position to make some decisions.

If you believe you have a good and tested system (you have tested it, not someone else) which will enable you to trade as a short term speculator – and are content to risk no more than 10 percent of your trading capital on any one trade, then it’s not unreasonable to conclude that you’re ready to give option trading for a living a serious go.

But if you prefer a less risky but also less profitable trading approach, using more conservative option trading methods such as covered calls, advanced spread trading strategies and the like, you should ideally like to have at least ,000 at your disposal and aim to return between 5 and 15 percent per month. An average of 10 percent per month would bring in around ,000 per month or k per annum. This realistically, is option trading for a living.

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Australia 200 cash index minimum spread cut to 1 point

Australia 200 cash index minimum spread cut to 1 point

(PRWEB) August 21, 2011

Singapore’s number one CFD provider for customer service*, IG Markets, has cut the minimum spread on the cash contract and SGD-Denominated contract of the Australia 200 Cash index to 1 point.

This spread cut is applicable to standard, mini and micro contracts. It improves the already tight spreads on our extensive range of stock index CFDs, starting from as low as 0.2 points on the Singapore Blue Chip. Spreads on other popular indices include the US S&P 500 from 0.5 points, and the FTSE 100, US Tech 100 and Germany 30 all from 1 point.

Peter McDermott, Managing Director of IG Markets in Singapore has said that this cut, following other spread cuts on indices and major FX pairs, is in line with IG Markets’ high standards of client service and commitment to provide value for money.

“When the spread in the underlying market is narrow, we pass these savings on to our clients with our lowest possible spreads. Our competitive rates include spreads on global indices from 0.2 points, major FX pairs from 1 pip, and commissions as low as 0.1% on share CFDs.”

“With transparent charges, rebates for high volume FX traders and our innovative price improvement technology, IG Markets is committed to remaining Singapore’s best CFD Provider for value for money as well as customer service*.”

Stock indices are a measure of the combined value of underlying stocks in a particular market. A stock index will typically represent a number of leading stocks in a sector, with the Singapore Blue Chip representing companies like DBS, Singapore Airlines and UOB.

IG Markets offers traders 24-hour trading across a wide range of global stock indices, including the Australia 200, Singapore Blue Chip, Hong Kong, Hong Kong HS42, Wall Street and Japan 225. Even when the underlying market is closed, IG Markets quotes out-of-hours prices, which means that traders can take advantage of changes to the market in real time, as other open markets rise and fall.

Along with global indices, IG Markets offers CFDs on FX, commodities, shares, options, binaries and more.

About IG Markets

IG Markets specialises in financial derivatives, principally CFD trading on over 7,000 global share CFDs, indices, FX, commodities, options, binaries and more. IG Markets is part of the IG Group, a UK FTSE 250 member with over 75,000 active clients worldwide. For further information please call +65 6390 5118 of visit http://www.igmarkets.com.sg/.

Remember that CFDs are a leveraged product and can result in losses that exceed your initial deposit. CFD trading may not be suitable for everyone, so please ensure that you fully understand the risks involved. Please consider our Risk Disclosure Statement before you enter into any transaction with us.

Investment Trends’ 2010 CFD & FX Report revealed IG Markets scored highest for overall customer satisfaction among Singapore’s CFD traders. The survey of nearly 8,000 investors, also revealed that IG Markets received the highest scores in the CFD industry for value for money, spreads, margin requirements, easy-to-use platform, charting, efficiency of taking trades, email and telephone customer service, reporting of positions and transactions, and phone trading.
IG Markets (ACRA No. 53059621X) is licensed by the MAS and International Enterprise Singapore.

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