Category: Options Trading

An option is a contract that allows (but doesn’t require) an investor to buy or sell an underlying instrument like a security, ETF or even index at a predetermined price over a certain period of time. Buying and selling options is done on the options market, which trades contracts based on securities.

Options are financial instruments used to hedge currency or interest rate risk. Currency options protect against unfavorable exchange rate movements while allowing the investor to take advantage of favorable movements in the exchange rate. Currency options are particularly useful when it is not sure whether the cash flow will occur or not.

As the name suggests, an option is basically an option. It gives the investor an option to exercise it if the exchange rate if favorable, if it is not favorable then the option does not have to be exercised.

Interest rate options allow an organization to limit its exposure to adverse interest rate movements while also allowing it to take advantage of favorable interest rate movements. Like currency options, interest rate options grant the investors or buyer of the option the right but not the obligation to deal at an agreed interest rate at a future date.

Interest rate options are used mainly by organizations to hedge the interest rates on their loans. Investors typically use currency options to hedge the risk of unfavorable exchange rate movements. Once again, the investors need to be a well versed and knowledgeable when dealing with options because they require a degree of technical proficiency. Suppose if an investor has to pay 5000 Euros 2 months and the home currency of the investor is expected to weaken against the Euro, then the investor can hedge this risk and buy an option to buy 5000 Euros at a price agreed today. 2 months later on the date of exercising the option, the investor can analyze if the exchange rate has weakened or strengthened. If the exchange rate has weakened according to the expectations then the investors may exercise the option and prevent his loss and if the expected change has not occurred then the investor may not exercise the option allowing it to lapse and trade using the spot rate that is more favorable. In this manner, currency options allow investors to hedge risk and avoid losses.

Many factors go into the price of an option. A trader cannot simply “buy calls” and expect to make money when the stock price rises. Much more is involved. … It is a poor strategy to buy (OTM) call options with a strike price of $50 if the average stock price move is $0.05 per day.

0 - 500
0
500

OPTIONS TRADING STRATEGIES: Simplified Strategies To Create A Passive Income On Options. Tips And Tricks On Stock Market, Day Trading, Money Management And Trading Psychology.

OPTIONS TRADING STRATEGIES: Simplified Strategies To Create A Passive Income On Options. Tips And Tricks On Stock Market, Day Trading, Money Management And Trading Psychology.

Do you want to earn profit with trading but you don’t know how? Have you tried trading yet but didn’t have the rightstrategies? Keep reading…Many investors are struck with fear at the mere mention of options trading. This is the kind of brainwashing that we constantly receive from financial experts (who don’t want you intruding on…

Pit Game (Amazon Exclusive)

Pit Game (Amazon Exclusive)

Fast-playing card gameFrenzied, shouting, card-swapping funCollect matching cardsPlayers race to collect 9 matching commodity cardsRing the bellFirst player to ring the bell wins

How to Make a Million Dollars Trading Options (The Millionaire Trader)

How to Make a Million Dollars Trading Options (The Millionaire Trader)

This was anonymously emailed to us by a Wall Street veteran, who asked us to publish this for him. He has become disgruntled with what he views as Wall Street scamming retail investors who trade options. Inside: -Options Basics -Volatility/Put Call Parity -Expected Value of Options Contracts -Risk Management and Trade Sizing -Where to Source…

The Complete Book of Option Spreads and Combinations: Strategies for Income Generation, Directional Moves, and Risk Reduction, + Website (Wiley Trading)

The Complete Book of Option Spreads and Combinations: Strategies for Income Generation, Directional Moves, and Risk Reduction, + Website (Wiley Trading)

Get a handle on option spreads to hike profit and squash loss The Complete Book of Option Spreads and Combinations is the definitive educational resource and reference guide for using option spreads and other common sense option strategies. This useful guide shows readers how to select the right strategy for their market outlook and risk/reward…