* All-Time High Volatility: What’s a Trader or Investor to Do? by IITM.com* The VIX Stretch by Optionetics:* VIX Options as Catastrophe Insurance by Vix and More.* Stock Market Trading Method by Kevin’s Market Blog.* How to Recognize Market Capitulation by Trading Market.* Forex Buyers Guide - Forex Guides and Tips.* Trader’s Blog: This blog provides many trading educational articles. Check out many of great articles under the Categories of Traders Toolbox, Technical Indicators, and Trading Tips & Techniques.FYI, if you want to get alerts on...
Monday, September 29, 2008
Tuesday, September 23, 2008
Options Transactions
In stock trading, there are only 2 types of transactions: To buy or to sell.In option trading, there are 4 different types of Option Transactions:1) Buy To Open2) Buy To Close3) Sell To Open4) Sell To Close.The type of transaction that an option trader will make depends on whether he/she is an Option Buyer or Option Seller/Writer.For an Option Buyer, the following are the types of transaction he/she will make:1) Buy To OpenWhen an Option Buyer wants to open / enter a “long” position on a certain option contract, he will need to do a “Buy To Open”...
Sunday, September 7, 2008
Main Factors that Affect Option’s TIME VALUE
As mentioned in “Option Price Components”, option price or premium consists of:For ITM Option:Option Price = Intrinsic Value + Time ValueFor ATM and OTM Options:Option Price = Time ValueWhereas:Intrinsic Value of ITM CALL Option:Intrinsic Value = Current Stock Price – Strike Price.Intrinsic Value of ITM PUT Option:Intrinsic Value = Strike Price – Current Stock Price.As you can see from the above formula, Intrinsic Value of an option is very straightforward.It’s simply the difference between option’s strike price and current stock price.Time Value...
