All About Options
Option ValuationThe competitive bids and offers in the marketplace affect the option premium. The price of an option is a function of supply and demand. Stronger demand will drive the option price up. An option premium is made up of two separate components: Intrinsic value: Intrinsic value of an option is based on the difference between its exercise price and the... [Read more of this review]
Option – The Concept of Balance
Say the word “option” to many non-institutional financial investors and they quickly lose interest in the topic. The reason they lose interest is because options in the financial world seem to be equated with gambling or high risk. Yet options can play an important role in balanced stock portfolios, so ignoring this investment should not... [Read more of this review]
When Trading Options Put Strategies Count!
Put options are rights to sell an underlying asset of a contract. It may be a stock option or commodity option, but the principles are the same. When you buy a put option, you expect that the market price of the underlying stock or commodity is going to fall, so when trading options put strategies are important. Puts are basically for bear markets.... [Read more of this review]
Futures and Options… the Optional Investment Future
Trading in futures and options is considered to be risky and that is why there is a lot of government regulation in this area. There are rules governing both investors and brokers and the rules are intended to insure everyone understands their rights and responsibilities. This is not intended to scare anyone away from investing in options but only... [Read more of this review]
Choosing an Option Strategy
When choosing an option strategy, the first question to ask is: what are my goals? In options trading there can be several goals. For example, if you are interested in trading stock options, your goals may be one or more of the following. Benefit from anticipating that a stock price is going to increase or decrease but without actually buying the stock Cover... [Read more of this review]
Finding Underlying Value with Derivatives Options
Derivatives options are financial instruments that have value due to an underlying asset. In fact the financial security asset is called an underlier and it can be any of a number of financial instruments. For examples, derivatives might be stocks or bonds or commodities for examples. Sometimes the underlier is foreign currencies or indexes. The point... [Read more of this review]
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Option Basics
Types of OptionsOptions have been there for more than a century. Options on equity stocks were available...
Option Valuation
The competitive bids and offers in the marketplace affect the option premium. The...
Uses of Options
The major uses of options are: Hedging Options provide hedger a chance to set either...
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Option Trading Strategies
Pay-off Diagrams for OptionPay-off diagrams can be used as a means of illustrating the risk/return profile of...
Basic Option Strategies
The four basic strategies of options are: Long call Long put Short call Short put Calls...
Option Strategies – Strangles
A strangle is the variation of the option straddle. The strangles involves buying...
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