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Showing results for tags 'technical analysis'.
Found 250 results
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The coupon payout of the altiplano option is guaranteed, but the vanilla-option payout component of the option will only be paid if the basket of options outperforms the benchmark rate of return for the lifetime of the option. They are usually traded by hedge funds and institutional investors.
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Alligator spreads are usually created by the trader engaging a large number of call and put options in a trade platform where the broker charges large commissions. Avoiding the effects of an alligator spread can be achieved by using a broker whose commissions are not large enough to swallow profitable spreads.
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The agreement value method has a provision for compensating a counterparty if they were not responsible for the premature end of the swap by making allowance for the use of a replacement swap. This replacement swap may provide different terms and conditions from the original swap to cater for changes in market conditions.
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f there's one trading dilemma that tends to inspire the most heated discussions among professionals and novices alike, it would have to be the one dealing with the decision to trade "with the trend" or "against the trend". Countless books have been written on the subject, and although there are no definitive answers, I've decided to set the record straight in regards to the realities of these two approaches and the proper way to handle each. First of all, let's define these two approaches for greater clarity. For our purposes, we'll consider "trend following" any strategy looking to take advantage of a directional move in the context of an existing trend within the timeframe in question. This requires that we make sure that there is an existing trend and then looking for tradable patterns to take advantage of a continuation of said trend. Technical traders learn to recognize the parameters that define a trend, and then look to "cherry pick" among the healthiest trends available (Ref. Trading the Pristine Method® (TPM) and Advanced Technical Strategies (ATS) seminars). On the other hand, "counter-trend" strategies revolve around taking advantage of perceived "excesses" in the directional move of a trend, looking to capture the retracements toward some form of "median" or "support/resistance" area. Although I'm obviously biased toward one of these styles (Trend following), allow me to discuss the pros and cons of each and the way to use each style to obtain the best results within a given trading environment. Trend-following styles base their approach on a simple principle: The trend displays the direction of the group in control (Buyers or sellers) and thus, trend-following traders will want to take positions using reliable patterns to try and take advantage of this potential continuation of the current direction, at least until the trend changes. These traders have developed "objective" ways to define a trend, its quality and odds of continuation. The idea is a rather simple one...trend-followers want to swim with the current. Whenever there's an established trend, the group in control (buyers for uptrends and sellers for downtrends) tends to push prices in the direction of the trend, at least until the imbalance of supply/demand created ceases to exist. Such imbalances create "momentum" that helps them achieve larger moves when they're right. How long can any given trend last? That's anyone's guess, although the analysis of supply/demand levels (Ref. title="technical trading"Pristine's ATS seminar) can sometimes help determine that with great precision. There will be a time when trading in the direction of a given trend becomes higher risk, because the trend could be "extended" or nearing support/resistance areas. In the end, these traders will have confidence in the trend at hand as long as the objective conditions that created and fuel the trend remain in place, looking to trade the patterns included in their respective Trading Plans within the trend. When said trend changes, they'll reevaluate the trading direction and use a new set of tactics better suited to the new trend. Counter-trend traders try to capitalize from those "retracements" toward the median price that typically take place within a trend. If you take any given chart displaying a decent trend, you'll notice that these "retracement" moves do happen, but when compared with the usual moves in the direction of a trend, they tend to be smaller in size and shorter in time. Execution also tends to be an issue when dealing with "counter-trend" trades, as the act of swimming "against the current" makes for greater levels of "slippage" when stops are hit (In many cases the "stop" of a counter-trend trader will be the entry signal of a trend-follower" and since the trend is in the opposite direction...). That's not to say they're not tradable, but the clues mentioned above should set the stage for the way in which a Pristine Trained Trader should normally handle these (Usually as short-term "scalp" trades instead of looking for holding periods similar to those that usually are expected when taking a "trend-following" position). The Pristine Method® seminar series teaches traders very specific parameters to trade some of these "counter-trend" events, looking for just those with the greater odds of producing a decent move. In the end, I'm a trend-following trader for most of my trades, looking to focus on the direction created by the stronger group of traders. Then I'll apply the strategies I learned in my Pristine education to profit from these trends, and when the trend changes I'll have the necessary objectivity to change with it. That's the professional way. Also, Pristine has been nominated for the Trader Planet STAR Award in the categories of Best Trading Course and Best Live Trading Room. We need your vote. Please go to http://www.traderplanet.com/l/9Kc and vote. You can vote everyday! Trade Well! Jeff Yates Contributing Editor Interactive Trading Room Moderator Gap and Intra-Day Trading Specialist Instructor and Traders Coach
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If a trader has 2 options contracts that are valued at a strike price of $5, then the aggregate exercise price is $5 X 200 units = $1,000. Usually the calculation does not include any premiums received or incurred on the trade.
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Whenever certain adjustments are made to an underlying asset such as a stock split or a share recontruction, the strike price of the options contract must be adjusted to reflect the new reality. Furthermore, coupon rates on Gannie May mortgages differ from the benchmark rate. Therefore the strike price must be adjusted so that the investor can receive the same returns on them. The term may also refer to the strike price of a security following adjustment for stock splits.
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It is an exotic option which is more complex than simple vanilla options, taking several factors into consideration for the trader to be able to make the decision after the option has been purchased rather than at the time the option was purchased.
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Just like in other swap deals, one party pays the floating rate while the other party pays a fixed rate, with payments being made on the accrual swap only on fulfillment of the set conditions for the trade.
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The zero coupon swap has several variations. Some are structured in such a way that the fixed lump sum is paid at the commencement of the contract, while others may be structured so that there is an option to convert the lump sum payment on the fixed arm into instalmental payments over the life of the contract. The objectives of the parties in the swap deal determine how the deal is structured.
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Municipal governments tend to use ZEBRA swaps because they make the cost of borrowing more predictable and therefore less risky.
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The Xetra commenced full electronic trading operations in 1997 and as an electronic trading system, is now being used in many countries in Asia and Europe.
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Also called triple witching, this is the last hour of trading before contracts on stock options, stock index futures and index options expire. There is usually increased volume of trade as investors try to unwind positions before the expiry catches up with them.
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The WCE does not buy or sell securities or assets, but only serves as a standardized exchange with rules that guide transactions between buyers and sellers. It transited to a full electronic trading platform in 2004.
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WTI is also known as Texas light sweet crude oil.
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What the wild card play does is to allow the seller of an option the opportunity to deliver the option for a given amount of time after the exchange is closed for trading, but still using the last price that the option traded at. This means that even when there is a price change between closing and actual delivery, the seller can still deliver at the closing price.
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This option is used by traders who are short on a Treasury note future to deliver the asset after the price of settlement has been known, to permit them to make more informed decisions so as to maximize profit on the sale of the option.This is an option which confers on a selling party of a Treasuries futures option, the right to give a notice at 8pm Chicago time, of an intent to delay the delivery of the Treasury option until after the exchange on which that future was trading has closed for the day, by which time the settlement price has been fixed.
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The wide basis occurs when traders expect a rapid shift in the fundamentals of the asset being traded between the present time and when the futures contract is to be settled. Usually as the time of expiry of the futures contract approaches, the differential in both prices narrows.
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WARFs are usually used to calculate credit ratings on collateralized debt obligations (CDO) instruments, and are used to assess the chance of default on the underlying debt that the CDO instruments are based on, and so give a clue as to the investment-worthiness of the portfolio being measured.
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The weather future is mostly used by energy companies as a way of hedging against business losses that may occur due to weather changes or fluctuations. For instance, if an expected winter month where an energy company will ordinarily sell large amounts of heating oil turns out not to be as cold as predicted, sales of heating oil will drop and the energy company will lose revenue. Use of a weather future prevents such losses.
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Weak hands are seen in situations where the options buyers do not have enough financial resources to redeem the payments that are due for commodities or assets that they are supposed to take delivery of on trade maturity, or do not have money to pay for storage and transportation of the asset.
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Wasting assets are commonly used to describe machinery and cars owned by a company, because these items tend to lose value over time. However, they can also be used to describe options since this is an investment vehicle where trade contracts have time limits.
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Several factors affect the premium on a warrant. A warrant premium decreases when the asset is highly volatile, has low volatility or if the warrant price increases.
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A warrant coverage is an agreement between the shareholders of a company and the company's management to issue a part of the shareholders' ownership in the form of warrants.
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A warehouse receipt is also called a vault receipt.
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The volume of trade is an indication of what the market's liquidity is like, with higher volumes indicative of greater liquidity. There are also time periods and days of the week when higher and lower liquidity is experienced.
