What’s the likelihood of $100 in a randomly chosen S&P500 security outperforming $25 in the index over 8 years

September 20, 2010 by  
Filed under Option Trading

With an 8 year employee stock option at $75 for a stock trading at $100, you can exercise and have $25 to invest (ignoring taxes). Clearly investing in a broad index like S&P500 is less risky than investing in a single security therein, but you will have only $25 to invest vs. your option giving you in effect a $100 stake in the market. If a security in the S&P500 was 100% correlated w/ the index then retaining the option should return much more (if the index and security double over 8 years one would end up with $125 profit with the hold strategy, $50 profit in the early exercise strategy). Rather than a theoretical Black-Sholes calculation, I’m interested in how often historically one would have been better off with one vs. the other. Over 8 years I intuitively feel that the early exercise would lose at least 80% of the time, on average lose badly and rarely win big – over 1 year perhaps losing 60% of the time but with large deviation and winning big quite often. Data?

Should these limit options orders fill?

September 18, 2010 by  
Filed under Option Trading

If you don’t actually trade equity options, please don’t answer. I need answers from people who have actual experience buying and selling options for real money.

(Note: I have traded options in a limited capacity for 8 years so I am not a neophyte. )

I am testing a new options strategy on SPY, the SPDR for the S&P 500 which is very active both for the security and its options. My strategy depends on getting in and out at prices of my choosing. I have been using the Virtual Trading engine at OptionsXpress to test my strategy and have found that it is not unusual to submit a limit order at the bid or ask and have it not fill. I am not placing large orders; a transaction of 5 or 10 contracts is typical. Consequently, it seems strange for me to enter a sell contract at 3. 25 and see the Bid/Ask sit at 3. 15/3. 20 and yet my order can spend several minutes in an open state. I understand that OE’s Virtual Trading is pretend so I am trying learn if in the actual markets, a small order at or better than the current price would be executed.
Thank you for your answer. I guess maybe my question wasn’t completely clear. I was trying to indicate that my ask was at or below the lowest bid (or that my bid was at or above the lowest ask), in other words that I was seeing a situation in which my transaction should have been executed but wasn’t and would stay open for an extended period. I have found that if I do market orders I get unpredictable fill prices so I would enter an order at a point such that I would know where it would fill if it did in fact fill.
Concerning “large orders” that was also part of my confusion. It was my thought that small orders at the proper bid or ask should execute. I could understand if an order for 500 contracts were to remain open but people actively in the market seeing an order for 10 contracts at the ask price would snap it up as easy money in a rising market trend. I am intentionally trying to keep my contract sizes such that there would be no impediment to my order being filled.
I see now that as hard as I tried to write my original question correctly I got it wrong and wrote my entered ask above the lowest ask and proposed a situation that would not result in a sale.

Forex Training Course Reviews – Is Instant Forex Profits Any Good?

July 28, 2010 by  
Filed under Forex Trading

Forex Training Course Reviews

When I first heard that Kishore M was releasing an online trading course, I was pretty excited. It’s not every day that you see this kind of expert take the time to create an online trading course. Many of the so called Forex ‘experts’ are more or less anonymous or unknown. In the case of Kishore M, this is hardly the case.
This is a man who has run live trading workshops for over 8 years in all corners of the world including: Hong Kong, London, the US, and Singapore. He has taught over 50,000 men and women how to become better and more profitable traders. Now, he has taken this knowledge and training material and turned it into a home study course called Instant Forex Profits.
There is no doubt as to the high level of knowledge and teaching ability of Kishore M as his students testify. However, there is a substantial difference between attending a live workshop and learning from a home study course. So, the question remains, is the Instant FX Profits course any good?
Let me start by saying that this course is not for everyone. First of all, it is not cheap so you may not be able to afford it or willing to pay for it. Second, this course has a lot of content. I’m talking about a huge amount of information, surrounding many aspects of the trading process. This course takes time to go through and master. You need to prepare yourself to invest some time in going over this material and practicing it. Forex Training Course Reviews
That being said, there is never any hope of success or achievement without some form of investment. Kishore M could have made his course a little lighter in information but you can’t really blame him for overdelivering. This course is rich in information but it can all help to serve you well to make more money on Forex. It’s as simple as that.
Instant FX Profits is a good Forex course because Kishore M knows his material and how to deliver it. In addition, the course covers the important aspects of trading that every trader needs:
The right strategies and methods to help you place good trades on the market for long term success.
Tricks on how to choose the right currency pairs for the time of the year.
How to reduce and control risk.
How to manage your money to place trades at the right and correct amounts.
How to work in the tumultuous environment of Forex without letting your emotions get the better of you.
Overall, Instant Forex Profits is a comprehensive and well crafted course presented by a true expert. I believe that this course is worth the price and can help you become a better trader for years to come. Forex Training Course Reviews

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