Posts Tagged ‘Factors’

Minimize risk factors and get potential profits in short-time with convenient binary option trading

In conventional trading, trades are executed through brokers via phone or other communicating methods. To get consistent success and stability in stock market, one must know the current market strategies. In our hectic scheduled life, we don’t get enough time for updating the market.

Therefore many companies are available that facilitate stock brokers for the assistance of investors. Stock brokers assist the investor in entire trading processing. They collect useful information and make you updated in market 24/7. It’s an era of e-trading, now the trader can executed through convenient online trading platform. Through online services, the investors can easily access market data, news, charts and alerts. Online services are highly cost-effective provides various opportunity to trader like 24/7 research facilities, track investment and getting latest market news.

Online trading provides fully automated trading system that is totally broker independent. The traders can access with advanced trading tools and can get direct control over their trading portfolio. E-trading provides opportunity to trade in multiple markets without any hassle. The investors can easily open and manage your account without any geographical limits. E-trading is for the traders who want to make lots of bucks with less capital investment. Besides these, online trading has provided several amenities like speedy processing, ease of use and instant information on global scale 24 hours. Today’s e-trading is a profitable choice for master trader and beginners both. Today’s the number of people who trade with binary options has been growing rapidly.

Binary trade option provide several opportunities to traders like more profitable, minimize risks, gets more profit within short time, get bonuses, gets free set ups and your don’t need to be financial expert. To trade binary options, you are not required to be gifted analyzer or forecaster to turn your knowledge into profits. The investors just need to grasp general trends and prediction of direction. The chances of risk are lower with binary trading. Additionally it’s the most simple and convenient process of trading. However the best way to trade is to choose one-hour expiry time.

Most of the binary option trading sites rewards member by offering them bonus cash. Few of the sites offer special weekend and holiday’s bonuses for their clients. With this option, the investors do not require broker or financial advisors. Besides these, there is no strict regulation with binary options, so even the newcomers can easily trade with binary options.

Related Free Options Trading Articles

Incoming search terms for the article:

• powered by SMF stock market prediction

Pt 6 Dan Passarelli on “Trading FX Options Greeks: Factors that Drive Profit”

Whats the best technique for valuing FX Options? How can accurate pricing drive profit? Why do investors need to understand how time, volatility and pricing influence FX Options trading. Join veteran options trader Dan Passarelli as he explains his methodology for option trading and valuation based on the “greeks”–the five factors that influence an option’s price. Dan discussed how the greeks can lead to more accurate pricing information that will lead to trading opportunities. The “greeks” (Delta, Gamma, Theta, Vega, Rho) are tools for measuring minute changes in an option’s price based on corresponding changes in: interest rates, time to expiration, price changes in the FX Option, and volatility. Using charts and examples, Passarelli explains how to use the greeks to be a better FX options trader.
Video Rating: 0 / 5

MIDEAST STOCKS – Factors to watch – Sept 7

MIDEAST STOCKS – Factors to watch – Sept 7
(Adds Qatar press item)

Read more on Reuters via Yahoo! Singapore News

Make Money Day Trading Options – Two Overlooked Factors That Result in Big Profits

In order to make money day trading options two factors typically overlooked are economics and the fundamental psychological forces that move markets. Although many traders are getting excited about buying and selling in the stock market they often times get to focused on the individual securities and lose sight of the big picture. As we have all seen in the last few years (weeks!) of market movement, losing sight of the big picture can result in lost opportunities.

Recent Volatility Is a Boon for the Prepared Trader
Imagine if you will the good fortune of traders who happened to have put in trade-triggers for a limit buy order on Proctor and Gamble last week, or perhaps (even better) had absurdly low priced limit orders set up on call options for Proctor and Gamble. The prepared trader made a huge score in that stock (and a few select others). How might a trader have known a sudden collapse was possible? People who make money day trading options are usually ready nonetheless.

Psychological Forces Were Writing on the Wall
It turns out that there were some indicators of an impending turn in the market. One example is the options fear indicator, known as the VIX. In the days leading up to the sudden fall, the VIX was trading at or very near historic lows. When this happens the market is indicating a likely peak, with a pull-back likely. A high VIX indicates psychological over-confidence of market participants (too many folks believing the market will continue to rise). A discussion of the VIX is likely to be vital to make money day trading options, knowledge of how to use this information comes with observation of a variety of indicators.

Economic Forces Had Not Caught Up to Psychological Euphoria
While psychological forces indicated traders had spent too much time at the punch-bowl, economic indicators (while improving) had not demonstrated enough strength to justify the rapid market ascent in the first four months of the year. Even though earnings for many reporting companies came in at or above expectations, the results were not such that investors saw likely near term improvement in hiring (a lagging indicator). The result was a dearth of stock buyers support at any level on even the most secure of companies. Once the market makers shut off their machines it turns out there was no one left on the buy side, and prices fell suddenly and sharply. In order to make money day trading options one must account for sudden market movements, and be prepared to jump at the best opportunities for huge (and sudden) profits.

Pt 7 Dan Passarelli on “Trading FX Options Greeks: Factors that Drive Profit”

Whats the best technique for valuing FX Options? How can accurate pricing drive profit? Why do investors need to understand how time, volatility and pricing influence FX Options trading. Join veteran options trader Dan Passarelli as he explains his methodology for option trading and valuation based on the “greeks”–the five factors that influence an option’s price. Dan discussed how the greeks can lead to more accurate pricing information that will lead to trading opportunities. The “greeks” (Delta, Gamma, Theta, Vega, Rho) are tools for measuring minute changes in an option’s price based on corresponding changes in: interest rates, time to expiration, price changes in the FX Option, and volatility. Using charts and examples, Passarelli explains how to use the greeks to be a better FX options trader.

Factors that Affect Strangle Prices

Since the Strangles’ profit potential is dependent on its price from purchase time to expiration, the investor should be aware of the several factors that affect the Strangles’ price.

Stock Price

The first is, of course, stock price. The stock’s price will dictate the value of both components of the Strangle – the call and put thus affecting the Strangle price as a whole. As the stock price moves, the prices of the call and the put will fluctuate via the current Deltas of the options and thereby affect the price of the Strangle.

As the stock moves higher, the price of the call will increase while the price of the put will decrease. However, they do not move linearly meaning that as the stock continues higher, the call’s value increases progressively more while the put’s value decreases progressively less. The option’s changing Delta causes this non-linear effect.

The call Delta increases as the stock goes up while the put Delta decreases as the stock goes up. This opposing effect continues until finally the call gains value dollar for dollar with the stock (once its Delta reaches 100) indefinitely. At the same time, the put value-loss stops because the put now has no value (as put Delta approaches 0). Of course, the opposite is true if the stock trades down.

The call will lose value progressively slower until it reaches $0 while the put will gain value at an increasing rate until the Delta becomes 100 and then the put will gain dollar for dollar with the stock indefinitely. The effect of stock movement on the dollar value and Delta value of the Strangle is in the chart below.

Again, we will use the July 60/65 Strangle as an example. The Strangle will be worth $3.31 ($2.11 for the call, $1.20 for the put). For clarification, these prices are not expiration prices. This Strangle has three weeks to go before expiration.

Stock $ Call $ Call Delta Put $ Put Delta Strangle $

55.50 .23 7 5.23 -76 5.46

57.50 .42 15 3.86 -62 4.28

59.50 .78 24 2.74 -50 3.52

61.50 1.35 34 1.85 -38 3.20

63.50 2.11 45 1.20 -28 3.31

65.50 3.13 56 .74 -19 3.87

67.50 4.35 66 .44 -13 4.79

69.50 5.77 75 .25 -08 6.2

Implied Volatility

A second factor that affects the pricing of a Strangle is implied volatility. As implied volatility increases, the value of the Strangle increases. As stated, the price of both calls and puts increase as implied volatility increases.

A Strangle will feel an increased effect when volatility increases because the strategy employs two options working together and not against each other. When a strategy uses two options working against each other, the effect of implied volatility on the strategy is the difference of its effect on each option. This is different from a Strangle. With a Strangle, the two options are working together combining the effect of implied volatility on each option.

Implied volatility movement affects an individual option to an exact dollar amount as indicated by the option’s volatility sensitivity component or Vega. An option with a $.05 Vega will increase five cents in value for every tick that implied volatility increases and likewise will decrease in value five cents for every tick that implied volatility decreases.

Because the Strangle combines a call and a put, the Vega value of the call adds to the Vega value of the put. This means that the Vega of a Straddle is the sum of the Vega of the call plus the Vega of the put.

Look back at our example. If the July 65 call has a .10 Vega and the July 60 put has a .07 Vega then the July 60/65 Strangle will have a .17 Vega. This means that for every tick that implied volatility increases, the July 60/65 Strangle will increase $.15 in value.

Conversely, for every tick that volatility decreases, the July 60/65 Strangle will decrease in value. The chart below shows how the Strangles’ value changes at different implied volatility levels.

Stock Price Vol. Level Call $ Put $ Strangle $ Strangle Vega

63.50 30 2.11 1.20 3.31 .168

63.50 40 3.02 1.97 4.99 .173

63.50 50 2.92 2.80 6.72 .174

63.50 60 4.83 3.63 8.46 .174

63.50 70 5.73 4.46 10.19 .174

When you study the chart, you can see that as implied volatility increases or decreases the value of the Strangle increases or decreases by the amount of the Strangles’ Vega multiplied by the amount of tick change in implied volatility.

Time

Finally, time is another major factor affecting the price of a Strangle. As you have learned from our previous strategies, time takes a toll on all options. Its effect is even more pronounced on this strategy that combines two options for the same time period.

A Strangle will see a much higher rate of decay than a single option. From previous discussions, we should be familiar with the option decay chart and its non-linear curve. As time goes by, the Strangle will decay, day after day, at an ever-increasing rate until expiration Friday at 4:00 p.m. The implication to the buyer and seller should be obvious.

The passage of time decreases the value of the Strangle and thus always favors the seller. Time works against the buyer. The buyer has only until expiration to get either a large stock or implied volatility movement to offset the price paid for the Strangle.

Options Trading Mastery: Factors that Affect Straddle Prices

Since the Straddle’s profit potential depends on its price from purchase time to expiration, the investor should be aware of the factors that affect the Straddle;s price. Several factors affect a Straddle’s price. The first is, of course, stock price. The stock’s price dictates the value of both components of the Straddle – the call and the put – affecting the Straddle price as a whole. As the stock price moves, the prices of the call and the put will fluctuate via the current Deltas of the options and thereby affect the price of the Straddle.

As the stock moves higher, the price of the call will increase while the price of the put decreases. They do not move linearly, meaning that as the stock continues higher, the call’s value increases progressively more while the put’s value decreases progressively less. This non-linear effect is because of the option’s changing Delta.

The call Delta increases as the stock goes up while the put Delta decreases. This opposing effect continues until the call gains value dollar for dollar with the stock (once its Delta reaches 100) indefinitely. At the same time, the put value-loss stops because the put now has no value (as put Delta approaches 0).

The opposite is true if the stock trades down. The call will lose value progressively slower until it reaches $0. Meanwhile, the put will gain value at an increasing rate until the Delta becomes 100. Then the put will gain dollar for dollar with the stock indefinitely. The chart below illustrates the effect of stock movement on the dollar value and Delta value of the Straddle.

Again, we will use the July 65 Straddle as an example. The Straddle will be worth $4.10 ($2.10 for the call, $2.00 for the put).

Stock/ Call/ Call Delta/ Put/ Put Delta/ Straddle

57.50 .42 15 7.81 -86 8.23

59.50 .78 24 6.16 -77 6.94

61.50 1.35 34 4.17 -67 6.06

63.50 2.11 45 3.46 -56 5.57

65.50 3.13 56 2.47 -44 5.60

67.50 4.35 66 1.69 -34 6.04

69.50 5.77 75 1.11 -25 6.88

71.50 7.37 83 .71 -17 8.08

73.00 9.09 83 .43 .12 9.52

A second factor that affects the pricing of a Straddle is implied volatility. As implied volatility increases, the value of the Straddle increases. The price of both calls and puts increase as implied volatility increases. A Straddle will feel a double effect when volatility increases because the strategy employs two options working together and not against each other.

When a strategy uses two options working against each other, the effect of implied volatility on the strategy is the difference of its effect on each option. This is different from a Straddle where the two options are working together. This combines the effect of implied volatility on each option.

Implied volatility movement affects an individual option to an exact dollar amount as indicated by the option’s volatility sensitivity component or Vega. An option with a $.05 Vega will increase five cents in value for every tick that implied volatility increases. It will decrease in value five cents for every tick that implied volatility decreases.

A call and its corresponding put will have the same Vega. That is, if the July 65 call has a .10 Vega, then the July 65 put will also have a .10 Vega. Remember, Vega is calculated by the strike price and does not differentiate put or call. Now that we have confirmed this concept, we can use it to calculate how much our Straddle price will change with a movement in implied volatility.

The Straddle combines a call and its corresponding put doubling the Vega effect. This means that the Vega of a Straddle is the addition of the Vega of the call and the Vega of the put. Since the put and call Vega are the same, we simply times the Vega of the strike by two.

Look back at our example. If the July 65 call has a .10 Vega, then the July 65 put must also have a .10 Vega and thus the July 65 Straddle will have a .20 Vega. This means that for every tick that implied volatility increases, the July 65 Straddle will increase $.20 in value. Conversely, for every tick that volatility decreases, the July 65 Straddle will decrease in value. The chart below shows how the Straddle-value changes at different implied volatility levels.

Price/ Vol.Level Call Put Straddle Vega

65.50 30 3.13 2.47 5.60 .174

65.50 40 4.05 3.39 7.44 .180

65.50 50 4.96 4.31 9.27 .182

65.50 60 5.88 5.23 11.11 .184

65.50 70 6.80 6.15 12.95 .184

When you study the chart, you can see that as implied volatility increases or decreases, the value of the Straddle increases or decreases by the amount of the Straddle’s Vega multiplied by the amount of tick change in implied volatility.

Finally, time is another major factor affecting the price of a Straddle. Time takes a toll on all options. Its effect is even more pronounced on the Straddle which that combines two options for the same period. A Straddle will see twice the rate of decay that a single option will. From previous discussions, we should be familiar with the option decay chart and its non-linear curve. As time goes by, the Straddle will decay, day after day, at an ever-increasing rate until expiration Friday at 4:00 p.m.

The implication to the buyer and seller is obvious. The passage of time decreases the value of the Straddle and thus always favors the seller. Time works against the buyer. The buyer has until expiration to get either a large stock or implied volatility movement to offset the price paid for the Straddle.

Incoming search terms for the article:

• how to calculate nifty levels
• powered by SMF a marketing company

Pt 4 Dan Passarelli on “Trading FX Options Greeks: Factors that Drive Profit”

Whats the best technique for valuing FX Options? How can accurate pricing drive profit? Why do investors need to understand how time, volatility and pricing influence FX Options trading. Join veteran options trader Dan Passarelli as he explains his methodology for option trading and valuation based on the “greeks”–the five factors that influence an option’s price. Dan discussed how the greeks can lead to more accurate pricing information that will lead to trading opportunities. The “greeks” (Delta, Gamma, Theta, Vega, Rho) are tools for measuring minute changes in an option’s price based on corresponding changes in: interest rates, time to expiration, price changes in the FX Option, and volatility. Using charts and examples, Passarelli explains how to use the greeks to be a better FX options trader.

Pt 5 Dan Passarelli on “Trading FX Options Greeks: Factors that Drive Profit”

Whats the best technique for valuing FX Options? How can accurate pricing drive profit? Why do investors need to understand how time, volatility and pricing influence FX Options trading. Join veteran options trader Dan Passarelli as he explains his methodology for option trading and valuation based on the “greeks”–the five factors that influence an option’s price. Dan discussed how the greeks can lead to more accurate pricing information that will lead to trading opportunities. The “greeks” (Delta, Gamma, Theta, Vega, Rho) are tools for measuring minute changes in an option’s price based on corresponding changes in: interest rates, time to expiration, price changes in the FX Option, and volatility. Using charts and examples, Passarelli explains how to use the greeks to be a better FX options trader.