Although some remain skeptical many others think the ECB’s Outright Monetary Transactions program is quite clever as it seems to offer the markets a credible plan to regain control of interest rates and counter speculation of a currency breakup. At the same time, China announced approvals for substantial new subway and highway projects in an effort to revive economic growth.
The weekly options have been the topic of our blog many times before. Despite this topic being the trendy subject and in the forefront of many discussions, it is helpful to recognize the functional flexibility this dramatically shortened lifespan brings to a variety of option strategies.
The ECB had another chance to dazzle yesterday and all we got was nothing. There seems to be no end of disappointment to the Euro area problems. There is no reset button.
When I think about times where I have seen new option traders lose a lot of money, there are a few that come specifically to mind. Early in the process, we work very hard to teach our option mentoring students proper risk management.
A lot of traders that are new to options have to first deal with the number of moving parts in an option contract and all the permutations that fall from it.
Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.
While most of us like to think equity prices are a function of logical fundamental valuations, the reality is something else. For now, the markets are moving based upon speculation the Federal Reserve will implement another round of Quantative Easing, QE3 among other things detailed below.
FundamentalsCotton traders are keeping an eye on Tropical Storm Isaac, as it is expected to become a category 2 Hurricane as it enters the Gulf of Mexico. The current anticipated path is expected to generate heavy rains in the Mississippi Delta region that could...
Measured as the standard deviation of log returns, volatility is widely regarded as a synonym for risk, and option implied volatility denotes the expected risk for an asset.
We are constantly correcting our option mentoring students about the state of the volatility. The VIX is NOT cheap, it is expensive, not on a historical level, from that perspective, and it's about normal, but on a relative level.
Last weeks’ low trading volume was typical for this time of the year as many investors and traders turn their attention to more leisurely activities. With Europe on holiday, there is also less risk of some surprise announcement rattling the markets so equities were able to drift higher on low volume.
Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.