Stock Options Exchange Elements
Stock options are a contract that allows the buyer or seller of an option the right to exercise the sale or purchase of a stock for a contracted underlying price within a certain time period. Market conditions and future direction is analyzed in the Wall Street Journal, IBD, Stock Option Trader and other financial news services.
Call and put options deliver large leverage to the holder who can play either side of the fence. The call option gives the holder the right to buy the underlying asset whereas the put option allows the holder to sell the underlying asset. Many good books about Wall Street stock option trading are available in bookstores or even available free from your broker.
The options buyer may choose not to exercise the right and let the option expire. The underlying asset has value however the option expires worthless under such circumstances.
Statistical models are used to determine the actual value of options allowing one to gauge risk and tolerance levels more accurately. These models form a backbone for one?s assumptions in calculating risk vs. reward.
Exchange-traded options form an important class of options which have standardized contract features and are traded on public exchanges. The low-cost leverage feature that options provide make them an extremely attractive financial instrument.
There are many indicators and tools used to predict price movement. Don?t try and use all of the indicators and signals at the same time since you will never see all of them in agreement, and you will get far more information than you can process. Information gleaned from stock option trader sources, the Wall Street Journal and other sources aid in option and stock trends.
As such there are leading and lagging indicators. A leading indicator gives a buy signal before the new trend or reversal occurs. A lagging indicator, as you may guess, gives a signal after the trend has been initiated, and trend momentum is established.
Using a very broad stroke for categorizing indicators, there are oscillators, and momentum indicators . Oscillators are leading indicators, and momentum indicators are lagging indicators. While the two can be supportive of each other, they can frequently give conflicting signals. This is not to say that one or the other should be used exclusively, but you must understand the potential pitfalls of each. - 23305
Call and put options deliver large leverage to the holder who can play either side of the fence. The call option gives the holder the right to buy the underlying asset whereas the put option allows the holder to sell the underlying asset. Many good books about Wall Street stock option trading are available in bookstores or even available free from your broker.
The options buyer may choose not to exercise the right and let the option expire. The underlying asset has value however the option expires worthless under such circumstances.
Statistical models are used to determine the actual value of options allowing one to gauge risk and tolerance levels more accurately. These models form a backbone for one?s assumptions in calculating risk vs. reward.
Exchange-traded options form an important class of options which have standardized contract features and are traded on public exchanges. The low-cost leverage feature that options provide make them an extremely attractive financial instrument.
There are many indicators and tools used to predict price movement. Don?t try and use all of the indicators and signals at the same time since you will never see all of them in agreement, and you will get far more information than you can process. Information gleaned from stock option trader sources, the Wall Street Journal and other sources aid in option and stock trends.
As such there are leading and lagging indicators. A leading indicator gives a buy signal before the new trend or reversal occurs. A lagging indicator, as you may guess, gives a signal after the trend has been initiated, and trend momentum is established.
Using a very broad stroke for categorizing indicators, there are oscillators, and momentum indicators . Oscillators are leading indicators, and momentum indicators are lagging indicators. While the two can be supportive of each other, they can frequently give conflicting signals. This is not to say that one or the other should be used exclusively, but you must understand the potential pitfalls of each. - 23305
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posted by Mr. Forex at
6:29 AM
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