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Found 164 results

  1. Here is a quick educational video we created on Options on Futures.
  2. Hello Everyone, For research purposes, I am looking for any option strategy, for a bullish/bearish/fluctuating market, that produces up to 100% ROI at some probability (I'll do the calculation myself) but also has limited loss potential of up to 50% of the sum invested. Does anyone know of such a strategy? The closest thing I've found was the long call spread strategy, but here the profit potential equals the loss potential. I would appreciate any help Thanks Netgo
  3. Options on futures are now available to trade through NinjaTrader Brokerage! This expansion allows options traders to save on their trades with NinjaTrader’s deep discount commissions and benefit from industry-leading support. Why Trade Options on Futures with NinjaTrader Brokerage? · Discount Pricing: Save on trades with simple low rates · Span Margins: Real-time portfolio margining · Low Minimum: Open your account with only $1000 In addition to the FREE NinjaTrader platform included with all brokerage accounts, traders will also have access to the CQG Desktop web-based platform to trade options on futures. · Current Clients: Contact Brokerage Support to start trading options on futures · New Clients: Open Your Brokerage Account Let Us Know How We Can Help Contact our brokerage team at 312.262.1289 to discuss how NinjaTrader’s solutions can be customized for both new & experienced traders. Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. View Full Risk Disclosure.
  4. I have been learning binary options and crypto trading for a little bit now. Its difficult to find a strategy that works best for me because there is a endless amount of them. What is the way that you found the strategy that worked for you or fit your trading style?? I have been trying alot of different ones but cant seem to find one that benefits me and its the most frustrating thing.
  5. Let's assume I was able to imply dividends from liquid options for the next 3 years, but I want to price an option expiring in the 4rd year from now. How would practitioners normally extrapolate implied dividends? From what i've observed there is a significant risk premium in implied dividends far out (implied divs are sold at discount). Actually the dividend term structure is declining. Therefore probably it makes more sense to extrapolate implied dividend rather than historical growth
  6. Could you suggest any understandable read on this topic? My advanced mathematical grasp is very limited, hoping for something comprehensible. Any author who took the pain to explain it step-by-step from basics to advanced. Thank you!
  7. hi, I'm new to forums in general and I would like to know If there is a way that after several candles whether up or down movement "red or green" (Min of 2 candles and max 4 or 6 candles or more) crossing the 20 dma, have a formula to insert a dot on top of the 20 dma
  8. Success is measured by your current status. You've had losses (we've all had) I was trading in the famed flash crash of 2010 and lost, that was a lesson for me to study volatility and history. These two aspects of the market are absolutely essential to study. I believe personally that we are heading into a deflationary economic situation and would advise you to not be long on the majority of your positions, its already a traders market. 40k in capital is a moderate sum to have aside, remember that being on the sidelines waiting for the right trade is a position in itself. He who runs from a fight lives to fight another day is an adage ive come to appreciate in my current trading of commodities. Common and cliche as it may seem too, "dont put all your eggs in one basket" Also, if you have gains, take them. Cut your losses at 7% Your current status is not giving up, that is awesome I highly respect that. Its like a marathon runner getting back up after falling and losing his first place. Be selective with your trades, small gains make large profits. Another thing to remember, during the gold rushes throughout history, men looked for the large gold nuggets, only to leave disheartened from the area, while others found "flour gold" this is microscopic gold that others passed over. An adage that came from that profit was , "Gold flour makes gold cakes" Small victories are your key. http://www.qdrv.com
  9. Hey Everyone, Since I'm trying to paper-trade an Options strategy that involves analyzing the "Greeks" (Delta, Gamma, etc.), I'm curious if anyone knew of any good tools for retrieving, searching, and analyzing the relevant data: especially if it's free! You can find data on Options Chains everywhere, but I could only find data on the Greeks from the Nasdaq website (here's an example for SPY: http://www.nasdaq.com/symbol/spy/option-chain/greeks). Unfortunately, it doesn't allow me to go directly to a particular date; instead it lists out all the strike prices for every Friday in a particular month across several "pages". In other words, if I want to find some data on options that expire -say- June 19, 2015, I'm greeted with a bunch of June 5th options on sheet "1 of 10" and I kinda need to guess which sheet has the data for June 19th. Feel free to check out the link to see what I mean. My initial solution was to import the data from each individual webpage to a spreadsheet, which is actually pretty easy to do with the "importHTML" function, then I could "massage" the data a little bit and find the appropriate data with a simple search (i.e. search "6/19/2015"). In fact, I made a rudimentary spreadsheet in Google Drive that brings up the Greeks from the Nasdaq website when you enter a ticker symbol, you can check it out with the following link and then clicking "File" > "Make a Copy" (https://docs.google.com/spreadsheets/d/1X9VBq7TLUa0wreJG_6DOQAN7pz-k5lTBYhppty_EH24/edit?usp=sharing). I might make some more updates in the future, for example I might have the spreadsheet ONLY display data for a particular date. In the meantime, though, I hope this helps you all with your Options Trading =) Oh, and of course, feedback & suggestions would be fantastic! In fact, feel free to copy & modify my work: I just request that you share your contributions with the community
  10. Hi all, I'm a total beginner and want to learn about trading. I've read some books and websites and found this one; the articles are really helpful! While studying options, I've come across the following question and I don't know how to solve it: Suppose you know the following: 

- Future is at 66 
- 70 strike straddle is trading at 27 
 - 50-60 put spread is at 2.5 
 - 50-60-70 put fly is at .2 
 - Assume volatility is constant across strikes 

Using the prices given and relationships between options of various strikes, what are the fair values for the 80 Call, 60 Straddle, and 40 Put? Assume we had a volatility smile among the curve, how would this make your markets different? Here is what I think: let's denote by p(K) and c(K) the put and call with strike K (assume sigma, time to maturity T, risk free r are constant and the same for all options). We know that p(70)+c(70)=27 -p(50)+p(60)=2.5 p(50)-2*p(60)+p(70)=0.2 We also know that put-call party holds, i.e. c+K e^(-r*T)=p+S_0 and the price of the forward F=S_0*e^(r*T)=66. From this information how do I compute c(80), p(40) and p(60)+c(60)? What do they mean by "relationships between options of various strikes"? Thanks!
  11. Traders who sell index calls are betting that the market prices of the index's underlying assets will fall. The strategy involves writing a call that's linked to a stock market index. The underlying index plays the same role as an asset does in options trading. Investors settle all index options in cash and there are no assignments of assets. When traders sell index calls, they predict that the index option will expire out-of the money. The profit potential and risk involved when using this strategy varies. Traders selling index calls limited their profits to the amount that they receive in premiums when selling a call. On the contrary, the loss-risk potential is unlimited, since any stock index can rise to as much as demand permits. Moneyness Review for Calls Out-of-The Money (OTM) = Strike price (more than) Market Price In-The-Money (ITM) = Strike price (less than) Market Price At-The-Money (ATM) Strike price (equals) Market Price Understanding Index Options and Regular Options Selling an index option functions the same way as in selling a regular option. The difference is that the underlying assets associated with index options are many compared to just the one underlying asset that's associated with a regular stock option. Example: The NASDAQ is worth $4000 and its index option, NASX (Index Option), is valued at $400 (1/100 of the NASDAQ). How to Sell Index Calls (ATM) The NASDAQ is worth $4000 (market price) in June. 1) Trader sells an index call option: NASXDec400 ($4.50) - One NASDAQ index option with a contract multiplier of $100 - Strike Price $400, at-the-money (ATM), expiring in 180 days - Premium Cost of $4.50 2) Trader receives $450 for the sale (100 x $4.50 (premium cost)). Total credit to enter the market: $450 Result one: NASX rises to $420 (ITM) in December. a) The call option sold expires ITM. The buyer exercises his or her right to buy 100 shares at $40. b) The difference between the option's strike price and the NASX is $20 (NASX: $420 - strike price:$400). There is no assignment of assets, so the trader uses the contract multiplier (CM) to figure the cash settlement. c) The trader pays the buyer $2000 [100 (CM) x $20 (difference in prices)]. Adding the $450 credit received when entering the market reduces the trader's total loss to $1550. Result two: NASX falls to $380 (OTM) in December. a) The buyer lets the option expire and does not exercise the right to buy. b) The buyer loses the premiums paid to the trader to enter the market. In this example, the trader keeps the $450 credit, which is the maximum profit for this type of trade. Advantages and Disadvantages of Selling Index Calls: Pluses: The upside to selling index calls is that the trader can enter the market without paying cash. He or she receives a credit, keeping the premium when the index option expires worthless and using the credit to offset losses in a bull market. Minuses: The downside in selling index calls is that it limits a trader's profits to only the amount received when entering the market. If the market value of the underlying index bottoms out, the trader could not capitalize on the short sale. Also, the potential loss-risk in a selling call index is infinite, since any index could theoretically rise as much as its supply permits.
  12. It is a variation of the ratio spread and is used when the trader believes the asset will make a mild bullish move, and the staggered nature of the short call strike prices prevents the trader from incurring a very large loss if the asset makes a remarkable move to the upside.
  13. The Black-Scholes option pricing model is an example of a gamma pricing model which is usually applied to a stock option to determine its value, using the price variation of the stock, the time value of money, the strike price and expiry time of the option and the time value.
  14. Trading With Small Account Sizes Now that regular forex trading activity has made its way into everyday households, retail traders have been able to enter the market with the ability to execute high leverage levels with very few limitations. But the unfortunate reality is that most forex traders are caught up in the hype and believe that quick riches are possible even when starting with the smallest account sizes. We have even started to see forex brokers offering micro accounts with minimum deposit sizes of $25 or less. This has democratized the trading environment but it has also made many traders with small account sizes vulnerable to quick market reversals that can wipe out an entire savings balance. For these reasons, it makes sense to assess the rules and tools smaller traders must utilize in order to stay in the game and keep their accounts growing. There are many market experts that will actually suggest there are no real differences when trading, and that a smaller account should be approached no differently than large institutional trading accounts. But while this is largely accurate, there are still some things that smaller traders must keep in mind in order to avoid a margin call situation that could deplete your entire trading account. Starting With Realistic Expectations The first problem that plagues most new traders is the problem of unrealistic expectations. This problem can take many different forms. But in most cases, you will see a new trader with a small account get a few successful trades in a row and then start to expect that those results will be duplicated forever. These traders will then start to do the math and figure out how much money can be made each day, week, month, or year. This is destructive, however, because it is taking your mind off of what you should actually be doing (analyzing the market and isolating high-probability opportunities) and centering it instead on scenarios that could make you rich with little effort. Markets are never this consistent, and there will be always be situations where you do better or worse than you have originally expected. Trading projections are generally not very useful (especially in the early stages) because there are going to be many events for which you are unprepared and many market scenarios that might not necessarily conform to your original trading plan. The unfortunate reality is that you are not going to be able to turn a $500 account into $1 million in a month or a year. Even if you max-out on your available leverage, these are unrealistic expectations that should be disregarded immediately if you plan on being an active trader for the long run. Large/Small Account Sizes: Similarities And Differences At the same time, markets are markets and trading is trading. The argument can be made that a $500 account should be traded no differently than a $1 million account (other than the fact that trade sizes should be proportionately smaller). There is a good deal of truth to this, because the probability for a given chart pattern will not change depending on the amount of money that is in your account. In these ways, large and small account sizes are essentially no different as long as you keep your risk percentages to appropriate levels. (Conventional wisdom here suggests that you should never risk more than 2% in any one position.) It is also important to remember the characteristics of the markets you are trading. One example would be differences in the ways gold prices vary relative to currencies. When viewing the market in this matter, the real issue is the strength of your strategy rather than the size or your position. The key here is to view your account in terms of percentages, rather than in Dollar figures. In other words, look to make back your 2% on the trade, rather than trying to make $100 or $1,000 on your trade. It is amazing how often this mistake is made, as traders start to look at the forex market as a source of income rather than as a living organism that does not care about whether you win or lose (or if you have made enough money to cover your monthly bills). It is also another reason why options trading strategies might even make more sense for new traders. Forex trading simply doesn't work like that and if you expect to stay in the game you will need to view your balance in terms of percentages rather than as a potential Dollar figure. Stop Losses and Market Anomalies Large accounts are better positioned and better able to weather market anomalies. As a personal example, I remember being short the EUR/CHF when the Swiss National Bank (SNB) decided to construct a price floor at 1.20. This was done to prevent excessive strength in the CHF but the move was largely unexpected and took many traders (myself included) by complete surprise. I was in front of my trading station when this occurred and I saw prices climb by more than a thousand pips in minutes. I did not have a stop loss in place when this move occurred and this created the biggest loss of my trading career. Fortunately, my position sizing in this case was relatively small and I was able to avoid the total depletion of my account. (Chart Source: CornerTrader) But what would have happened here if I was just getting started? Would I have been able to withstand the losses taken by such an unexpected move? Prior to that day, I never would have guessed that markets (especially the EUR/CHF, traditionally a low-volatility forex pair) could move 1,000 pips in a day -- in any direction. Of course, I was wrong in this case and the mistake turned out to be very costly. For these reasons, stop loss placement is much more important for those with small account sizes as there is much less flexibility and margin for error. The market can (and eventually will) surprise you and destroy your expectations. For those with small trading accounts, proper preparation here (a stop loss) is vital and could potentially be the only thing that keeps your account active when a market anomaly occurs. Conclusion: Does Size Matter? So here we come to the ultimate question: Does account size matter? Unfortunately, the answer is a vague ‘yes and no.’ “Having a small account size means that you will absolutely need to take certain precautionary measures (ie. having a relatively conservative stop loss that is in place),” said Sam Kikla, markets analyst at BestCredit. “This is the only way to protect your account from market anomalies that can erase all of your previous gains in short order.” Another factor to remember is that leverage is much more dangerous when your account size is small. There is absolutely no reason a trader with a $500 account should ever be taking 200:1 leverage. At this rate, it would only take a small string of losses to completely eliminate your ability to continue trading. On the plus side, smaller traders that obey these rules (and focus on percentages rather than Dollar figures) will have access to the same returns as those with institutional accounts (again, in percentage terms). The real issue here is whether or not you are taking an overly aggressive approach to your trades. This is not a viable option for those with smaller account sizes. So, there are important differences that can put smaller traders in a more difficult positions. The positive here is that most of these difficulties are removed when you keep a conservative trading approach, use active stop losses, and structure your trades so that they are working as a percentage of the whole.
  15. Hi I suppose this could relate to all derivatives but I'm particularly interested in equity options. Can someone answer this question. I have always been baffled as to why one would price derivatives using binomial or Black Scholes models for derivative pricing. I am assuming it is so one can work out the price of the option and only trade that option when the market price (separate from the calculated price using Black Scholes or whatever) falls below the calculated price using a derivatives pricing model? Is this a correct assumption or am I completely on the wrong track? Thanks
  16. In a cliquet option with a strike price of $1,200, if the option expires at $1,000, the trade will end out of the money. The cliquet option wil then ratchet the next strike price to automatically rest at the expiry price in the previous trade, which is $1000. If the trade then ends at $1,100, the trader gets a payout and the strike price is then reset to the trade expiry of $1,100 for the next trade.
  17. tmoptions

    Thoughts?

    Hello Gurus, I bought 10 SPY PUT contracts of Oct 14 (expiring in 8 days) for $1.48 yesterday. The market moved the opposite direction and I've been in the red since down 650+) Any suggestions/thoughts on how to minimize the incurred loss at this point? -TIA
  18. A trader who implements a put backspread strategy is betting that an asset's value will fall. The technique involves selling more put options than purchased, usually 2:1, of the same underlying asset and with the same expiration. The profit potential is infinite when carrying out a put backspread, and investors control any potential losses by selling puts that satisfy the 2:1 ratio. Moneyness Review for Puts: In-The-Money (ITM) = Strike Price (more than) Market Price Out-of-The Money (OTM) = Strike Price (less than) Market Price At-The-Money (ATM) Strike Price (equals) Market Price How to Implement a Put Backspread Strategy Disney stock is worth $48 (market price) in June. 1) Trader buys two (2) put options: DISJul45($2.00) - 200 shares of Disney stock - Strike Price $45 (OTM), expiring in 30 days - Premium Cost of $2.00 2) Trader sells one (1) put option: DISJul50($4) - 100 shares of Disney stock - Strike Price $50 (ITM), expiring in 30 days - Premium Cost of $4 3) The trader pays $0 to enter the market. [$400 (paid for puts) - $400 (received from sale)] Result one: Disney stock remains at $45 in July. a) Both the put options purchased expire worthless. (OTM) b) The put option sold is ITM. The buyer exercises his or her right to sell the trader 100 shares at $50. The trader pays $5000 to the seller. c) The trader sells 100 Disney shares in the open market, receiving $4500. d) The trader loses a total of $500 after subtracting the prices paid for the shares from the share sale. [$500 = $5000 (paid for shares) - $4500 (received for shares)] Result two: Disney stock falls (moderately) to $40 in July. a) The put option sold is ITM. The buyer exercises his or her right to sell the trader 100 shares at $50. The trader pays $5000 to the seller and receives 100 shares. b) The trader buys 100 Disney shares in the open market, paying $4000. c) The two put options purchased are ITM. The trader exercises his or her right to sell the trader 200 shares at $45. The trader sells the 200 shares and receives $9000 from the buyer. d) The trader loses a total of $0 after adding and subtracting the prices paid for the shares from the exercised puts. [$0 = $5000 (paid for 100 shares) + $4000 (paid for 100 shares) - $9000 (received from puts purchased)] Result three: Disney stock falls (crashes) to $30 in July. a) The put option sold is ITM. The buyer exercises his or her right to sell the trader 100 shares at $50. The trader pays $5000 to the seller and receives 100 shares. b) The trader buys 100 Disney shares in the open market, paying $3000. c) The two put options purchased are ITM. The trader exercises his or her right to sell the trader 200 shares at $45. The trader sells the 200 shares and receives $9000 from the buyer. d) The trader loses a total of $1000 after adding and subtracting the prices paid for the shares from the exercised puts. [$1000 = $9000 (received from puts purchased) - $5000 (paid for 100 shares) - $3000 (paid for 100 shares)] Result four: Disney rallies to $50 in July. a) All the put options purchased expire worthless (OTM). b) The trader loses a total of $0 since there was no cost to enter the market. Advantages and Disadvantages of Implementing a Put Backspread Strategy: Pluses: The upside to this type of strategy is that the investor can make substantial profits with limited loss-risk. An investor's profit potential is infinite when market price crashes, since theoretically any asset can reach a zero value. Investors can also enter the market without paying cash. The put backspread also limits the trader's loss potential to the terms of the put option sold. In large market upswings, all options will expire OTM, resulting in no-loss, since there is no cost to enter the market in a 2:1 backspread. Minuses: The downside in using a put backspread strategy happens when the underlying asset's market price expires at-the money with the sold put. However, loss potential continues to decline any price in between the strike prices of puts sold and purchased
  19. Chooser Option refers to option contracts that can only be exercised on certain days. It offers flexibility to both the holder and writer.
  20. The CBOE was opened in 1973 and is located in Chicago. Presently more than one billion options contracts are traded on the CBOE annually.
  21. Due to the fact that the Delta is an estimate of the intrinsic value of an option, the Charm is especially useful for measuring the decay of an option when it is close to expiration, since the chance of an option that is out of the money expiring in the money drastically decreases as the option draws closer to expiry.
  22. A chameleon option gives investors the ability to meet varying investment expectations with a single contract instead of purchasing multiple contracts.
  23. By straddling the asset's market price, the long straddle is an option trade type that is used to benefit from up or down movements of the asset. So whether the asset price rises or falls, the long straddle is a winner. Used when the trader is sure that the asset will move in a direction, but is unsure of which direction.
  24. In trades were traders either receive or pay premiums on trades, it is necessary to know which of the trades initiated involves long trades. These are the long legs of the trades.
  25. The long jelly roll is an options trade that aims to profit from a time value spread through the sale and purchase of two call and two put options, each with different expiration dates.
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