Archive for the ‘Option Trading’ Category

How to Optimize Your Stock Portfolio With Options

Posted on 10 Jul 2010

THE IMPACT OF NEWS ON OPTION PRICES By Brian Over by Senior Staff Instructor Chicago Board Options Exchange One of the least understood topics in the world of options pricing is the effect that news has on an option’s price. Since options are risk transfer instruments, their prices are determined in a way that is similar to the determination of insurance premiums.A riskier situation can result in a higher cost (premium)for the insurance against risk.As an example, you could ask .


Option Trading and Oil Futures Markets

Posted on 25 May 2010

This book very good for option traders in begginer, which explain a basic concept and what must to do for growing profit. Option Trading and Oil Futures Markets preview: CONCEPTS IN OPTION TRADING An option is a contractual agreement contingently to purchase or sell a particular asset or financial right, such a s a share, a commodity or a futures contract, for a specific price within a specific time period. This asset or this financial right i n the option .


Noncommercial Trading in the Energy Futures Market

Posted on 25 May 2010

This book written by Charles Dale and John Zyren. Noncommercial Trading in the Energy Futures Market preview: How do futures markets affect spot market prices?This is one of the most pervasive questions surrounding futures markets, and it has been analyzed in numerous ways for many commodities.Early researchers concentrated on the relationship between spot prices and the “term structure” of futures prices, i.e., the instantaneous values of futures prices with different maturities. For example,Holbrook Working’s cost-of-storage concept was The growth of .


Futures Brokers, Commodity Trading and Alternative Investments

Posted on 25 May 2010

If you interesting to play in this business, this is some reference for you. This book is talk about option trading in the future. Futures Brokers, Commodity Trading and Alternative Investments preview: Several books have been written about trading the commodity markets in recent years. We consider this list to be a good source for anyone learning about the markets. We have picked these books from over 600 titles written within the last15 years. These books are available at most .


Option Trading Strategies

Posted on 22 Feb 2010

Option Trading Strategies: Options are one of the most powerful financial tools available to the investor. A large part of the power of options is only apparent when several options are traded and combined together to create an options and stock portfolio. By combining options positions investors can create unique payoffs (often at very little cost) by combining positions of bought and sold options. Option trading strategies have fancy names like “bear spreads”, “condors” and “butterflies”. Option strategies .


Option Trading and Stock Price Movements

Posted on 22 Feb 2010

Information in option volume about direction of future stock price movements (joint work with Jun Pan at MIT) Expiration date clustering of underlying stock prices at strike prices (joint work with Sophie Xiaoyan Ni and Neil Pearson at UIUC) Other research on behavioral finance, options, and volatility. Does Option Volume Contain Information about Future Stock Prices? Natural idea: Ñ “Fact and Fantasy in the Use of Options” (Fischer Black, 1975) Since an investor can usually get more action for .


Option trading strategies based on semi-parametric implied volatility surface prediction

Posted on 22 Feb 2010

We propose constructing a set of trading strategies using predicted option returns for a relatively small forecasting period of ten trading days to form profitable hold-to-expiration, equally weighted, zero-cost portfolios based on 1-month at-the-money call and put options. We use a statistical machine learning procedure based on regression trees to accurately predict future implied volatility surfaces. Such accurate forecasts are needed to obtain reliable option returns used as trading signals in our strategies. We test the performance of the .


Option Trading Tutorial: Information or Differences of Opinion?

Posted on 22 Feb 2010

This paper investigates the motive of option trading. We show that option trading is mostly driven by differences of opinion. Our findings are different from the current literature that attempts to attribute option trading to information asymmetry. We present three specific findings. First, cross-section and time-series regressions reveal that option trading is significantly explained by differences of opinion. While informed trading is present in stocks, it is not detected in options. .


Option Trading Tutorial – Thinking “Outside the Box”

Posted on 22 Feb 2010

We are fortunate to have Dave Rivera, a professional trader and options expert to put together this article for us. Even if you are not presently using options you should read this article to help with your trading education. Dave is extremely helpful and if you need to know more about options or just have a question on options, you can reach him the link at the end of the article. By Dave Rivera Wouldn’t it be great if .


Option Trading and Oil Futures Markets

Posted on 22 Feb 2010

The establishment, of a very successTu1 crude oil futures market by the New York Mercantile Exchange (NYMEX) has introduced a new and important factor into the process of oil price formation. Trading in crude oil Tutures has been expanding very rapidly and now provides an instrument that enables economic agents to hedge against short-term price risks. The NYMEX is also a reading mechanism ior oil price discovery in the short term. However, as is the case for most tutures markets, .


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