LESSON 31. PROFIT / LOSS PROFILE FOR SOLD PUT OPTION
When selling a Put option, our maximum profit is limited by the option premium., and our risk is not limited in the event of a decrease in the price of the underlying asset<
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LESSON 30. PROFILE OF PROFIT / LOSS FOR SOLD OPTION CALL
When selling a Call option, our maximum profit is limited by the option premium., and our risk is not limited in the event of an increase in the price of the underlying asset<
LESSON 29. COVERED AND UNCOVERED SALE OF OPTIONS
Covered and uncovered sale Any option sale can be: 1. Covered - we have sold the option and have a long position in the underlying asset if we sell Call or short position in the underlying asset if we sell Put. The position in the underlying asset covers your risks on the sold option.
LESSON 28. PURCHASE OF OPTIONS. TIME IN POSITION
The second important rule of option trading: If time affects our position negatively, means, minimum time should be in position! (time is working against us). Decrease or increase can happen, Or maybe not, but time flows in one direction anyway, every day bringing us closer to expiration.
LESSON 27. PURCHASE OF OPTIONS. ENTRY INTO A POSITION AND ITS CREATION. PART 2
Time to expiration When buying a longer-term option, we have less risk, but this position will be less profitable if the market moves in our direction. The fact, that the reduction in the cost of an option under the influence of time is maximized as the expiration date approaches. Ie.
LESSON 26. PURCHASE OF OPTIONS. ENTRY INTO A POSITION AND ITS CREATION. PART 1
Obviously, buy options and wait, when will the BA trend start, in a situation, when time is running against your position, not optimal solution. It is more logical to buy options after, how an upward or downward movement in a futures has already begun, and not before the start of this movement<
LESSON 25. RISKS OF PURCHASING OPTIONS
Risks of buying options (Long Call и Long Put) In one of the past lessons, we briefly touched on, so-called, three-dimensionality of option trading. Three factors affect the option position: BA price dynamics, time to expiration and volatility.
LESSON 24. PROFILE / LOSS OF PURCHASED PUT OPTION
Let's take a look at the price chart of a “blue chip” stock such as Sberbank.. Let's admit, current share price 138,44 ruble. Seems, that after such a strong growth of the stock, a correctional movement is possible. To capitalize on a possible decline, we buy a Put option on a futures on Sberbank ATM shares with a strike 14 000 by price 349 rubles.
LESSON 23. EXPIRATION PROFILE AND CURRENT POSITION PROFILE FOR THE PURCHASED CALL OPTION
One important point to note. Let's now simulate the position from the previous lesson In any option analysis toolkit, we see two position profiles: 1. Expiration profile is that profile, which is depicted by the green line 2.
LESSON 22. PROFILE OF PROFIT / LOSS FOR PURCHASED CALL OPTION
Risk / reward ratio As we already know, option buyers' risk is limited by the premium, but there is no potential profit. When buying a Call option, our profit is not limited in the event of an increase in the price of the underlying asset (futures)