The remainder of this paper is organized as follows. In the next section, we evaluate two strategic models for Media News based on a qualitative cost-benefit analysis. We then undergo a quantitative analysis based on ROA. Using sensitivity analyses, we show that ignoring the valuation of these options can lead to the wrong decision. Finally, we provide a foundation to generalize the results of investment in the technology sector, specifically in the areas of mobile gaming and commerce.
- all option contracts on the same underlying stock having the same striking price, expiration date, and unit of trading.
- an exchange member whose function it is both to make markets–buy and sell for his own account in the absence of public orders–and to keep the book of public orders.
- Neutral option strategies are generally designed to perform best if there is little or no net change in the price of the underlying stock.
- a riskless arbitrage that involves selling the stock short, writing a put, and buying a call.
- These publications are ideal for accommodating library budgets, as they contain hand-selected research content of the highest quality.
- a listed option that expires one week after it is listed.
Detailed examples, exhibits, and checklists show you the power of each strategy under carefully described market conditions. Although there are plenty of great options trading books for beginners, « Trading Options For Dummies » offers a basic, yet comprehensive overview of the subject. The title may suggest otherwise, but this reference book is also ideal for intermediate-level investors, too, or those with Foreign exchange market general trading options knowledge yet want to better understand risk factors, new techniques, and more. a written option is considered to be __________ if the writer also has an opposing market position on a share-for-share basis in the underlying security. That is, a short call is _________ if the underlying stock is owned, and a short put is _________ if the underlying stock is also short in the account.
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The physical commodity itself, typically a currency or Treasury debt issue, underlies that option contract. an option traded over-the-counter, as opposed to a listed stock option. The OTC option has a direct link between buyer and seller, has no secondary market, and has no standardization of striking prices and expiration dates. describing an opinion that is neither bearish nor bullish. Neutral option strategies are generally designed to perform best if there is little or no net change in the price of the underlying stock. the value of an option if it were to expire immediately with the underyling stock at its current price; the amount by which an option is in-the-money.
The strategy can be implemented with either puts or calls. In either case, an option with a higher striking price is purchased and one with a lower striking price is sold, both options generally having the same expiration date. the price at which the option holder may buy or sell the underlying security, as defined in the terms of his option contract. It is the price at which the call holder may _________ to buy the underlying security or the put holder may _________ to sell underlying security or the put holder may _________ to sell the underlying security. For listed options, the ___________ is the same as the striking price. Participants learn about the unique attributes of options and why investors have to think differently when investing in these instruments, whether as a stand-alone investment or in conjunction with existing stock positions. The course includes stock and index option strategies, as well as an understanding of the nomenclature of the terms used in option trading.
Options As A Strategic Investment: Fifth Edition By Mcmillan, Lawrence G ( (
A « dynamic » _______ _______ _______ is one that changes as time passes. a listed option that expires one week after it is listed. There are a limited number of these available–usually on the most liquid stocks and indices. They are generally listed on a Thursday to expire on the following Friday, eight calendar days later. There is no guarantee that a stock which has weekly options listed one week will have them the next, although the most active indices and stocks generally have them each and every week. a term used to describe the relationship of option implied volatilities or of the prices of volatility futures, over a number of months. In a bullish market the term structure generally consists of a rising sequence of prices ; while in a bearish market, the term structure is usually a declining sequence of prices .
the cost of a covered writing position, subtracting the call price from the stock price. a term in technical analysis indicating a price area lower than the current price of the stock, where demand is thought to exist. Thus, a stock would stop declining when it reached a forex support area. an exchange member whose function it is both to make markets–buy and sell for his own account in the absence of public orders–and to keep the book of public orders. Most stock exchanges and some option exchanges utilize the specialist system of trading.
This comprehensive book will serve as a reference on the application and concepts of different option strategies. an option strategy that has both limited risk and limited profit potential, constructed by combining a bull spread and a bear spread. Three striking prices are involved, with the lower two being utilized in the bull spread and the higher two in the bear spread. The strategy can be established with either puts or calls; there are four different ways of combining options to construct the same basic position. an option strategy that makes its maximum profit when the underlying stock declines and has its maximum risk if the stock rises in price.
A ______ ______ may also be placed « with discretion »–a fixed, usually small, amount such as 1/8 or 1/4 of a point. In this case, the floor broker executing the order may use his discretion to buy or sell at 1/8 or 1/4 of a point beyond the _______ if he feels it is necessary to fill the order. These are long-term listed options, currently having maturities as long as two and one-half years. any trading in an option position after the position is established. a trader on the exchange floor who executes the orders of public customers or other investors who do not have physical access to the trading area. the process whereby a stock’s price is reduced when a dividend is paid.
About Lawrence G Mcmillan
a riskless arbitrage that involves selling the stock short, writing a put, and buying a call. a strategy in which one has an unequal number of long securities and short securities. Normally, it implies a preponderance of short options over either long options or long stock. the orders to buy or sell, entered by the public, that are away from the current market. The board broker or specialist keeps the public book. Market-makers on the CBOE can see the highest bid and lowest offer at any time.
a strategy in which one sells the underlying stock short and buys calls on more shares than he has sold short. This is also called a synthetic straddle and is an outmoded strategy for stocks that have listed puts trading. a term describing any option that has intrinsic value. A call option is __________ if the underlying security options as a strategic investment is higher than the striking price of the call. A put option is __________ if the security is below the striking price. a strategy of covered call writing in which the investor is striving to earn an additional return from option writing against a stock position that he is targeted to sell, possibly at substantially higher prices.
All holders of options must indicate their desire to exercise, if they wish to do so, by this date. an option that gives the holder the right to buy the underlying security at a specified price for a certain, fixed period of time. a type of option arbitrage in which both a bull spread and a bear spread are established for a riskless profit. One spread is established using put options and the other is established using calls.
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The end goal is to establish your own « hedge fund » with options at the center. It’s written with both newcomers and established traders in mind and offers an interesting take on how to manage risk in your portfolio when introducing options.
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The study guide is more of a quiz covering each respective section but certainly lends itself well to solidifying the information. Here is the link to the Study Guide for those of you interested in viewing it as well. Before I conclude, I think its useful to state that this book isn’t intended to be read cover to cover. You could, but this is a very dense book with smaller than average text so attempting to read it entirely would take considerable time. I use it as a reference work and I can assure you I refer to it on a nearly a daily basis.
Normally, this refers to bids and offers made for large blocks of securities, such as those traded by institutions. Listed options may be used to offset part of the risk assumed by the trader who is facilitating the large block order. a ration spread that is established as a neutral position by utilizing the deltas of the options involved. The neutral ratio is determined by dividing the delta of the purchased option by the delta of the written option. a riskless transaction in which the arbitrageur buys the underlying security, buys a put, and sells a call.
a term in technical analysis indicating a price area higher than the current stock price where an abundance of supply exists for the stock, and therefore the stock may have trouble rising through the price. an option whose underlying entity is not common stock; typically refers to options on physical commodities, but may also be Foreign exchange reserves extended to include index options. a put or call option that is traded on a national option exchange. Listed options have fixed striking prices and expiration dates. a form of arbitraging index futures against stock. The expiration date for listed stock options is the Saturday after the third Friday of the expiration month.
In addition, a short call is _________ if the account is also long another call on the same security, with a striking price equal to or less than the striking price of the short call. A short put is _________ if there is also a long put in the account with a striking price equal to or greater than the striking price of the short put. The market in listed options and non-equity option products provides investors and traders with a wealth of new, strategic opportunities for managing their investments. Options as a Strategic Investment is a bestselling guide providing the latest market-tested tools on how to enhance your earnings. Not just that, but this book will also help decrease the downside risk on whatever situation the current market is on. Inside Options as a Strategic Investment are scores of business-tested tactics and proven techniques if you are investing in many of the innovative new options products available in the market today.
For call options, this is the difference between the stock price and the striking price, if that difference is a positive number, or zero otherwise. For put option it is the difference between the striking price and the stock price, if that difference is positive, and zero otherwise.
the range within which a particular position makes a profit. Generally used in reference to strategies that have two break-even points–an upside break-even and a downside break-even. The price range between the two break-even points would be the profit range. a method of selling index futures or buying index put options to protect a portfolio of stocks.
Best Overall: Options Trading Crash Course
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