Archive for November, 2009
While I agree with the first two answers that you should read at least one good book about options before trading them, I suggest you start your education at the CBOE Learning Center at
http://www.cboe.com/LearnCenter/default.aspx
with the free online tutorials. Once you have completed the tutorials, you be better prepared to evaluate different options books and pick the one(s) best for you.
The CBOE has a bibliography at
http://www.cboe.com/Institutional/Bibliography.aspx
and if you stick with books from the bibliography you can be sure their quality.
My two favorites from that list are
McMillan, Lawrence G.: options as a Strategic Investment, Fourth Edition
Natenberg, Sheldon: Option Volatility and Pricing, Revised Edition
but I recommend you try to review the contents (at a library, a bookstore, or at amazom.com) to pick books appropriate for you.
I will also mention that Mark Wolfinger has written beginner books on options and particpates on the Yahoo message board at
http://messages.yahoo.com/Business_%26_Finance/Investments/forumview?bn=4686677
If the idea of being able to ask the author a question directly appeals to you you can find his books at
http://www.mdwoptions.com/
I don’t know nothing about stock option, but i’m really interesting in this. I’ve found a lot of seminar that offer how to gain high profit from stock option & the testimonial the success people from stock option. Could you share what is the risk & benefit entering stock option market? How to analysis?How to manage the risk?& what is the strategies? How to trade & the step to enter this market? What’s the tools? What’s the different between the usual stock market? Thanks a lot
CBOE has a very nice online tutorial, after all this is where all options are traded
CBOE = Chicago Board of Options Exchange
I was approved for an account and for options trading. Then after I wasted a week waiting for them to allow me to trade options I got a letter saying that my credit is not good enough for them to let me trade options.
I am closing my account with them. What broker is likely to allow me options trading without credit checking?
Thinkorswim is a awesome brokerage that is a must for options trader. They don’t have any options levels like most brokerage or credit checks. Their software is the best for options analysis. Best of all there is no additional brokerage fee with them. Also commission is competitive because they will match most brokerage commissions.
The software is a bit complex but if your serious about the software I can give you a quick tutorial. Contact me for details
i m trading in only cash segement , i don’t know call/put option trade or f n o trade, so guide me
If one has no idea what an option is, one should not be trading them.
I would start learning about options here for FREE from people whop having to sell you.
http://www.optionseducation.org
http://www.optionseducation.org/classes/
i left school last year with A-Levels but wasnt drawn to the idea of university, i went into a trainee broker role in london which i felt wasnt for me, so left. I am now considering a job as a trader after using IGIndex spread betting and would like to know of any possible avenues i may be able to go down to reach my goal? any help would kindly be appreciated. i am happy to work in an arcade but would prefer to work for some sort of fund/bank but have no idea who to contact about it, i am happy to move anywhere in the world.
I also understand that the majority of these jobs require degrees, so maybe i would be better off going to uni? or failing that does anybody have any other ideas of jobs i could do?
If you have a source of income, try taking the Securities Industry Diploma exams. Three papers, one of which is compulsory, but you can choose to do a paper on financial futures and options. You DON’T need a Ph.D. in maths, though you do need to be comfortable with numbers and spreadsheets. Spread betting is not the same as options, and to get an opening somewhere as a trainee, you should probably consider a wider range of products, such as futures, commodities or currencies. Buy a copy of the Investor’s Chronicle, and see the derivatives houses advertising in the back – you could approach each of them directly.
I have made a decent amount of money on Full Tilt without ever depositing anything (I won three freerolls, $15 top prize) I would like to withdraw the money, but the only options available for withdrawal are like click2pay which isn’t available for U.S. citizens and instant e checks which i know nothing about and don’t trust. I’ve heard there is no way to withdraw directly to your checking account (using visa) so I really don’t know what my options are. Any ideas?
Well, first off if you only won $45 than you can’t even withdrawal, the minimum is $100. Also if you never deposited the only way you can withdrawal is by check. Echecks is completely safe and reliable and is the only way for U.S. players to withdrawal directly into their bank accounts but you have to make a successful deposit with them before you can withdrawal with it. If I were you I’d just keep the $45 in there and play till you hit the $100 and withdrawal by check, it usually takes less than a week. If you need anything else check out the site below and good job in the freerolls.
1. Paulson appears on Face The Nation and says "Our banking system is a safe and a sound one." If the banking system was safe and sound, everyone would know it (or at least think it). There would be no need to say it.
2. Paulson says the list of troubled banks "is a very manageable situation". The reality is there are 90 banks on the list of problem banks. Indymac was not one of them until a month before it collapsed. How many other banks will magically appear on the list a month before they collapse?
3. In a Northern Rock moment, depositors at Indymac pull out their cash. Police had to be called in to ensure order.
4. Washington Mutual (WM), another troubled bank, refused to honor Indymac cashier’s checks. The irony is it makes no sense for customers to pull insured deposits out of Indymac after it went into receivership. The second irony is the last place one would want to put those funds would be Washington Mutual. Eventually Washington Mutual decided it would take those checks but with an 8 week hold. Will Washington Mutual even be around 8 weeks from now?
5. Paulson asked for "Congressional authority to buy unlimited stakes in and lend to Fannie Mae (FNM) and Freddie Mac (FRE)" just days after he said "Financial Institutions Must Be Allowed To Fail". Obviously Paulson is reporting from the 5th dimension. In some alternate universe, his statements just might make sense.
6. Former Fed Governor William Poole says "Fannie Mae, Freddie Losses Makes Them Insolvent".
7. Paulson says Fannie Mae and Freddie Mac are "essential" because they represent the only "functioning" part of the home loan market. The firms own or guarantee about half of the $12 trillion in U.S. mortgages. Is it possible to have a sound banking system when the only "functioning" part of the mortgage market is insolvent?
8. Bernanke testified before Congress on monetary policy but did not comment on either money supply or interest rates. The word "money" did not appear at all in his testimony. The only time "interest rate" appeared in his testimony was in relation to consumer credit card rates. How can you have any reasonable economic policy when the Fed chairman is scared half to death to discuss interest rates and money supply?
9. The SEC issued a protective order to protect those most responsible for naked short selling. As long as the investment banks and brokers were making money engaging in naked shorting of stocks, there was no problem. However, when the bears began using the tactic against the big financials, it became time to selectively enforce the existing regulation.
10. The Fed takes emergency actions twice during options expirations week in regards to the discount window and rate cuts.
11. The SEC takes emergency action during options expirations week regarding short sales.
12. The Fed has implemented an alphabet soup of pawn shop lending facilities whereby the Fed accepts garbage as collateral in exchange for treasuries. Those new Fed lending facilities are called the Term Auction Facility (TAF), the Term Security Lending Facility (TSLF), and the Primary Dealer Credit Facility (PDCF).
13. Citigroup (C), Lehman (LEH), Morgan Stanley(MS), Goldman Sachs (GS) and Merrill Lynch (MER) all have a huge percentage of level 3 assets. Level 3 assets are commonly known as "marked to fantasy" assets. In other words, the value of those assets is significantly if not ridiculously overvalued in comparison to what those assets would fetch on the open market. It is debatable if any of the above firms survive in their present form. Some may not survive in any form.
14. Bernanke openly solicits private equity firms to invest in banks. Is this even close to a remotely normal action for Fed chairman to take?
15. Bear Stearns was taken over by JPMorgan (JPM) days after insuring investors it had plenty of capital. Fears are high that Lehman will suffer the same fate. Worse yet, the Fed had to guarantee the shotgun marriage between Bear Stearns and JP Morgan by providing as much as $30 billion in capital. JPMorgan is responsible for only the first 1/2 billion. Taxpayers are on the hook for all the rest. Was this a legal action for the Fed to take? Does the Fed care?
16. Citigroup needed a cash injection from Abu Dhabi and a second one elsewhere. Then after announcing it would not need more capital is raising still more. The latest news is Citigroup will sell $500 billion in assets. To who? At what price?
17. Merrill Lynch raised $6.6 billion in capital from Kuwait Mizuho, announced it did not need to raise more capital, then raised more capital a few week later.
18. Morgan Stanley sold a 9.9% equity stake to China International Corp. CEO John Mack compensated by not taking his bonus. How generous. Morgan Stanley fell from $72 to $37. Did CEO John Mack deserve a paycheck at all?
19. Bank of America (BAC) agreed to take over Countywide Financial (CFC) and twice announced Countrywide will add profits to B of A. Inquiring minds were asking "How the hell can Countrywide add to Bank of America earnings?" Here’s how. Bank of America just announced it will not guarantee $38.1 billion in Countrywide debt. Questions over "Fraudulent Conveyance" are now surfacing.
20. Washington Mutual agreed to a death spiral cash infusion of $7 billion accepting an offer at $8.75 when the stock was over $13 at the time. Washington Mutual has since fallen in waterfall fashion from $40 and is now trading near $5.00 after a huge rally.
21. Shares of Ambac (ABK) fell from $90 to $2.50. Shares of MBIA (MBI) fell from $70 to $5. Sadly, the top three rating agencies kept their rating on the pair at AAA nearly all the way down. No one can believe anything the government sponsored rating agencies say.
22. In a panic set of moves, the Fed slashed interest rates from 5.25% to 2%. This was the fastest, steepest drop on record. Ironically, the Fed chairman spoke of inflation concerns the entire drop down. Bernanke clearly cannot tell the truth. He does not have to. Actions speak louder than words.
23. FDIC Chairman Sheila Bair said the FDIC is looking for ways to shore up its depleted deposit fund, including charging higher premiums on riskier brokered deposits.
24. There is roughly $6.84 Trillion in bank deposits. $2.60 Trillion of that is uninsured. There is only $53 billion in FDIC insurance to cover $6.84 Trillion in bank deposits. Indymac will eat up roughly $8 billion of that.
25. Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion. Where is the rest of the loot? The answer is in off balance sheet SIVs, imploding commercial real estate deals, Alt-A liar loans, Fannie Mae and Freddie Mac bonds, toggle bonds where debt is amazingly paid back with more debt, and all sorts of other silly (and arguably fraudulent) financial wizardry schemes that have bank and brokerage firms leveraged at 30-1 or more. Those loans cannot be paid back.
What cannot be paid back will be defaulted on. If you did not know it before, you do now. The entire US banking system is insolvent.
I have my garden, well stocked pantry sheld, outdoor stove, fire wood and propone burners. This will get worse…much much worse……..good luck to all!!….be prepared
My philosophy is spend it before they steal it. As it is, our currency is only worth half what it was a year ago. That means the banking system has stolen half of your savings. That is why I am investing all my money in energy. I just bought a wood stove since it was only 2k more than my yearly propane bill. Solar panels and an electric car is next. This, my fixed morgage and my garden will protect me from the thieves that run the banking system. I feel sorry for all you suckers that are being screwed by the banks. Take your money out and invest in your future!!!!
Compare options Xpress and Etrade for Day Trading, What are the benefits of either one?
I have an Etrade account with Level 2 that also covers PK and BB stocks.
Options Xpress seems to be cheaper but is it as good?
Try Zecco or Trade King
Hey guys, I am looking to start doing spread options trading, but I am still confused on what I can and can’t do. I understand that if i buy an option call, I can sell it later, but if I write an option call, can I sell it later? I use optionshouse as my brokerage. Also, do I need a margin account to trade spreads?
Its actually very simple…There are two types of options… puts and calls. There are two things you can do with options. You can buy them or you can sell them. If you buy an option you can sell it back anytime before the expiration date. Assuming it still has some value. If you sell an option you can buy it back anytime before the expiration date.
Now spreads are generally buying and selling at the same time. For example you might buy a 45 april call and sell the 50 april. This would be a debit trade and you can do it as a spread. In other words as a single order executing both the buy 45 and sell 50 in one fell swoop of an order. Later when this spread is selling at a higher price you can then sell the spread back to lock in your profit. This example is commonly referred to as a ‘bull call spread’ . There are many other varieties of spreads. Some target bullish, bearish, and even neutral outlooks. Please see the referenced websites for more great information on option trading.
Regarding your question about margin account. It will depend on your broker. Most brokers will let you do a variety of spreads in any type of an account. That is a better question for your individual broker.
good trading
marko
Sure I have been trading options for years and have had much sucess. A beginner strategy that I still use is sticking with very liquid stocks. Such as exchange traded funds like QQQQ, DIA, SPY. Use technical investing to pick entry points (a good site I recommend for that is signalwatch.com click on Dow and you will get free analysis of how the market is reading technically) Wait till the market is either looking overbought buy puts, if it is looking oversold buy calls. Also make sure you pick a strike price that is very close to being in the money. And make sure you give your self at least 3 weeks before the contract is going to expire which will normally give you a few opportunities to take profits. Dont be greedy. Dont panic. Experience is the key to being sucessful at anything.. Don’t invest more than you can afford to lose. The most important lesson to learn in option trading is studying what the movement in the stock will do to the price of the option……….many times if the market has it priced in a stock is overvalued the stock will sell off a few buck or go up a few bucks and your option will not move….That is why it is best to trade very liquid contracts. Good day.