Optimum Options Plr Ebook

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Table Of Contents

Foreword

Chapter 1: Options Trading Basics

Chapter 2: Points To Note Through The Valuation Of Options

Chapter 3: Exploring The Different Model Implementations

Chapter 4: The Basic Trades Of Traded Stock Options

Chapter 5: Risks Of Option Trading

Chapter 6: The Basics About Option Strategies

Wrapping Up

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Chapter 2: Points To Note Through The Valuation Of Options

Synopsis

Through the popularity of the options trading there is now a multitude of potential interested investor available at any given time. The trading volume in the options platform is also opened avenues that are now even available through electronic trading and data dissemination.

Some Points

Some of the transactions are done in a speculative nature where the price direction is manipulated to the investor’s advantage while other transactions are done as hedge against the existing or perhaps even anticipated positions.

There is also the possibility of offering positioning factors that are not usually available based on the underlying stock, index or futures. This will then cause the valuation on the options to remain relatively unchanged thus creating the ideal security intended until the transaction is completed.

Being able to make valuations that allow the right options or combination of options to be picked, will facilitate the risk against the reward tradeoff.

The investor should have some basic knowledge of the intrinsic value and time value of the options trading style. The intrinsic value is reflected in the amount whereby the option is in the money scenario also termed as ITM, and the time value style is the amount of money paid for the length of time until the agreed date of the options expiry.

The time value option presents a very viable measurement for the concept trader. The money paid would ensure the extra time given for the lock in period of the option facilitates the decision to either eventually pick up the option or not to. The value of the call option increases with the upward movement of the stock corresponding movement but this is also true when the stock goes down. Volatility also plays a significant role in the valuation position of the stock.

Chapter 3: Exploring The Different Model Implementations

Synopsis

Options trading implementations are all about learning and matching the analyses tools to the advantage of the investor. In doing do the investor is able to limit the losses and capitalize on any possible gains.

The Models

Besides free trial implementations there are also trial programs on the sites offering options trading experience up for hire. Data is automatically calculated base on the sock prove, strike proven number of options bought the option price the margin interest rate and any other data that may contribute to the model implementation choice.

The simple probability calculator helps to process and provide information on options and pricing and all related material that will assist the investor to make informed decisions.

There are also programs for making graphs and tables with subsequent printing, exporting results to Excel and then savings done on files I the HDD.

The databases with various kinds of information constantly being updated would include volatility reports, broker recommendations, market comments, numerous quotes, statements and newsletter all of this provide the investor with rich information.

The strategy implementation is where the call is made for the options to be bought at strike price, and if the market is bullish the strike price will be comparatively higher.

This applies for the buy call style. As for the sell put style the strategy implementations would include the put options are the sold at strike price and if the scenario is bullish then the “in the money puts” could then be sold.

The bull spread strategy implementation is where the call options bought with a strike price and another call option sold with a strike bull producing a net debit.

The diagonal spread is a near dated call option that is sold and longer dated in the further out of the money call option that has been bought..

Chapter 4: The Basic Trades Of Traded Stock Options

Synopsis

Trading stock options if done in an informed fashion can bring an extra dimension to the investing arm for the investor or trader. Basically the trade can exercise the option to buy or sell the underlying security or the trader can use the options as a hedge against loss..

The Trades

If the choice made is to exercise the option, then the buy and sell action can be done anytime on or before the expiration date of the agreement. In this scenario the trader can take possession or sell the stock at the fixed price of the option regardless of the market prices on the stock at the time of the conclusion of the transaction.

Alternatively the trader can hold on to the stock with a built in gain or chose to sell it and keep the profits minus the cost of the option, commissions and taxes. Such a move can also be applied to work, when a put option or the right to sell at a fixed price should the fall in price be forthcoming.

In most cases traders never intend to actually take possession of the underlying security. The price of the underlying stock directly affects the price of the option as it moves in a upward or downward fashion and the amount of time remaining on the option also has some effects on the price. Although the supply and demand factors play a part in the bearing on its price structure the above mentioned two elements are the primary conditions considered.

Traders can opt to make use of the hedge as an option to limit the losses if there is no surety that the price will not fluctuate to the negative platform.

This will provide the trader the right to sell the stock at an agreed stipulated price. Another effective way the trader can minimize the loss is to put in a stop- loss order where the sale of the sock would be exercised should it fall below an agreed point.

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