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Advanced option trading strategies

Advanced option trading strategies are believed to have been used in options since ancient times. In real estate market, call options have long been used to assemble large parcels of land from separate owners; e.g., a developer pays for the right to buy several adjacent plots, but is not obligated to buy these plots and might not unless he can buy all the plots in entire parcel. Film or theatrical producers often buy the right - but not the obligation - to dramatize a specific book or script. Lines of credit give potential borrower the right - but not obligation - to borrow within a specified time period. Many choices (embedded options) have traditionally been included in bond contracts. E.g. many bonds are convertible into common stock at the buyer's option, or may be called (bought back) at specified prices at the issuer's option. Mortgage borrowers have long had option to repay the loan early, which corresponds to callable bond option. In London, puts and "refusals" (calls) first became well-known trading instruments in 1690s during reign of William and Mary.

Privileges were options sold over the counter in 19th century America, with both puts and calls on shares offered by specialized dealers. Their exercise price was fixed at a rounded-off market price on the day or week that option was bought, and expiry date was generally 3 months after purchase. They were not traded in secondary markets. Supposedly first option buyer in the world was ancient Greek mathematician and philosopher Thales of Miletus. On a certain occasion, it was predicted that the season's olive harvest would be larger than usual, and during off-season he acquired the right to use a number of olive presses the following spring. When spring came and olive harvest was larger than expected he exercised his options and then rented the presses out at much higher price than he paid for his 'option'.



  1. Types of expiration

    : There are two different types of options with respect to expiration. There is a European style option and an American style option. The European style option cannot be exercised until the expiration date. Once an investor has purchased the option, it must be held until expiration. An American style option can be exercised at any time after it is purchased. Today, most stock options which are traded are American style options. And many index options are American style. However, there are many index options which are European style options. An investor should be aware of this when considering the purchase of an index option.

    The strike price also helps to identify whether an option is in-the-money, at-the-money, or out-of-the-money when compared to the price of the underlying security. You will learn about these terms later.
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  1. Exercising options

    : People who buy options have a Right, and that is the right to Exercise. For a Call exercise, Call holders may buy stock at the strike price (from the Call seller). For a Put exercise, Put holders may sell stock at the strike price (to the Put seller). Neither Call holders nor Put holders are obligated to buy or sell; they simply have the rights to do so, and may choose to Exercise or not to Exercise based upon their own logic.
  2. Assignment of options

    : When an option holder chooses to exercise an option, a process begins to find a writer who is short the same kind of option (i.e., class, strike price and option type). Once found, that writer may be Assigned.

    This means that when buyers exercise, sellers may be chosen to make good on their obligations. For a Call assignment, Call writers are required to sell stock at the strike price to the Call holder. For a Put assignment, Put writers are required to buy stock at the strike price from the Put holder.
  3. Underlying instrument

    : A class of options is all the puts and calls on a particular underlying instrument. The something that an option gives a person the right to buy or sell is the underlying instrument. In case of index options, the underlying shall be an index like the Sensitive index (Sensex) or S&P CNX NIFTY or individual stocks.
  1. Liquidating an option

    : An option can be liquidated in three ways A closing buy or sell, abandonment and exercising. Buying and selling of options are the most common methods of liquidation. An option gives the right to buy or sell a underlying instrument at a set price.

    Call option owners can exercise their right to buy the underlying instrument. The put option holders can exercise their right to sell the underlying instrument. Only options holders can exercise the option.

    In general, exercising an option is considered the equivalent of buying or selling the underlying instrument for a consideration. Options that are in-the-money are almost certain to be exercised at expiration. The only exceptions are those options that are less in-the-money than the transactions costs to exercise them at expiration. Most option exercise occur within a few days of expiration because the time premium has dropped to a negligible or non-existent level. An option can be abandoned if the premium left is less than the transaction costs of liquidating the same.
  2. Option pricing

    : Options prices are set by the negotiations between buyers and sellers. Prices of options are influenced mainly by the expectations of future prices of the buyers and sellers and the relationship of the option's price with the price of the instrument.

    An option price or premium has two components : intrinsic value and time or extrinsic value. The intrinsic value of an option is a function of its price and the strike price. The intrinsic value equals the in-the-money amount of the option. The time value of an option is the amount that the premium exceeds the intrinsic value.
    Time value = Option premium - intrinsic value.

The daytrader

Share prices charts

  1. Trading for a living
  2. Short term trading strategies
    Gaining knowledge is the first step to trading.
  3. Price action trading
  4. Range trade
  5. What is a swing trader?
  6. Follow the trend
    1. Trend following strategy
      Traders violate it surprisingly often!
  7. Initial public offering
  8. Options contract
  9. Advanced option trading strategies
  10. Futures market
  11. Exchange traded funds
  12. New fund offer
  13. Commodity trade finance
  14. Trade network
  15. How to be a successful trader?
    For those who do not know about day trading, ...
  1. How to read share price charts?
  2. Candlestick charting
  3. RSI chart


Make money with MySpace

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Do you have a MySpace Account? Enjoy hanging out on MySpace or Facebook? You can also earn money from this! Get Free Followers provides you nice and easy way to cash in on your MySpace Account.

MySpace and Facebook are both powerful marketing tools that aren't exploited at their full potential. Even they have hundreds of millions users, only a very small part of these users know they can earn thousands of dollars using MySpace or Facebook.

There are 2 ways you can make money with MySpace in Get Free Followers :

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    You add your account for others to connect it in Get Free Followers and increase the MySpace Connections. This will boost traffic to your pages that you hve posted on your MySpace stream. You only have to host some advertisement in your pages now, which will convert that MySpace traffic to a sizeable revenue.
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    Even if you don't have others to connect you and see your stream, you can still make some bucks daily by just sending other MySpace users Connection requests - with the help of Get Free Followers tool.

    Very simple! When you connect other users' accounts in Get Free Followers, you get some coins. Then you can convert these coins to REAL money from the Coins to Cash section and withdraw that whenever you want - minimum amount required for withdraw is only $1!
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Above 2 sections will take you through a detailed how-to article to explain how you can make money with MySpace. Sure, it's easy to get frustrated by the overblown bells and whistles that go along with a typical MySpace visit, but there are many reasons why it's still a useful tool for musicians looking for gigs, fans, and exposure.

  1. Fans are taken right to the music

    - Pretty much everyone looking for music on the web knows this, so MySpace is one of the first stops when looking for a particular song. It's a no-frills way to hear the latest single from a band.
  2. Standardized site for clubs/press to link to

    - Regardless of how fancy and flashy your official website might be, Myspace makes it relatively easy to access all your basics. Many clubs and press outlets still prefer to post links to MySpace over the band's official site.
  3. It's an actual web presence

    - Sure, Facebook is a bit cleaner and has more buzz in the social media world, but MySpace does not require users to sign up in order to access the content. This makes for a quick and easy web presence that anyone can check out.

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    MySpace has a high value because of it's massive userbase, making it potentially rich source of advertising income. Given the audience is a young demographic it's a very lucrative market for advertisers.
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  3. MySpace Music Play
    Let people know about your MySpace Music. Create a widget or a song, or a video or an image and attempt to 'infect' the MySpace community with it - using Get Free Followers.
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    13. Get paid to Pin on Pinterest
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