If you are going to trade options then you need option trading software. The software gives you full access to the market and can help you track activity, assist with market analysis and even make trading recommendations. Options trading computer program provide price quotes, analyze account positions and help you learn the ins and outs of trading through information.
The best option trading software does a lot more than just spit out results of calculations. You need software that completes the statistical calculations required for in-depth analysis and then explains the results. Other features the option trading software may contain if it is to provide maximum benefits include:
- Ability to enter “what-if” data in formulas to modify output
- Model changing markets
- Test trades against historical data
- Accepts your trading rules and monitors markets using those rules
- Live price quotations
- Charting
- Mathematical analysis
- Portfolio analysis
- Risk vs. Reward calculations
- Market news feeds
- Trading opportunity alerts
- Order placement
- Market interface
- Portfolio tracking and pricing
This is not a complete list but it gives you a good idea of the features to consider in option trading software. The computer program is designed to help you trade and manage options but it does not replace the need to understand how option trading works. The option trading software just makes decision making and portfolio tracking easier.
Filed under General by on Jul 8th, 2011. Comment. 
The long straddle is an option trading strategy that traders use to establish a market position no matter which direction the market moves. The long straddle involves buying a call option and a put option at the same time. The options will have the same underlying asset, the same strike price and the same expiration date. Another way to say it is that you will purchase what is called a long call and a long put in this option trading strategy.
A Moving Market
The straddle option trading strategy gets its name because you straddle the market with a put and a call. You are in a market position that can take advantage of a rising or falling market. The risk is limited to the premium plus any trading costs you pay. The strike price of the options should be near or at the money.
For the option to have value in the long straddle option trading strategy before expiration the market must move. It if goes sideways, the option will be worthless because profit comes from changes in the underlying security price.
This strategy is applicable to markets that experience cycles or are expected to move significantly due to anticipated news impacting the underlying asset. If the cycle occurs, then you can take profit on one side of the spread. As the cycle progresses you can then earn profits on the long trading strategy by taking profits on other side of the spread.
To effectively use the long straddle option trading strategy in a cyclical market, you need to have an expiration date that gives the market time to move. Long straddles have unlimited profit and limited risk.
Filed under Option Trading Strategies by on Jul 1st, 2011. Comment.
When trading options call and put are two of the most essential concepts. They represent the two types of options, and in every transaction you will use one or both types. The third essential concept is the premium or option value.
In options call and put transactions form the basis for spread and ratio strategies.
Spreading Profit and Risk with Options Call and Put
A spread is created with the purchase and sale of options that have different strike prices and the same or different expiration dates. In this type of strategy used with options call and put contracts are mixed and matched. Here is just a sample of the types of strategies investors use.
- Bull Call Spread – call and call
- Bear Put Spread – put and put
- Risk Reversal Spread – short call and long put
- Sell, Buy, Sell Vertical Spread – call, call, put
- Ratio Call Spreads – call, calls
The Butterfly Spread, Long Strangle, Short Strangle, Long Straddle, Short Straddle, Credit Spreads, Condor Spread and Calendar Spreads are yet more strategies used. When trading options call and put is present in every one of them either singly or in a combination that enables you to hedge your risk and/or maximize your profit.
Start with Basics and Take it Slow
The terminology can seem a little overwhelming at first. But when you are learning how to trade options call and put are what you need to learn first. Learning how to options trade takes some time because you have to understand not only the terminology but what makes markets tick so you can form opinions as to when the underlying asset prices will move.
The bottom line is that the best way to approach options trading is methodically.
Filed under Option Trading Strategies by on Jun 25th, 2011. Comment.