Amy Winehouse Andy Dick Angelina Jolie Anna Nicole Smith AOL Apple Architecture Art Ashlee Simpson Ashley Greene Auto Cars Avril Lavigne Ayu Oktasari Bai Ling Bank of America Barack Obama Beauty and Style Beauty-Style Bernanke Beyonce Bing Bobby Brown Brad Pitt Britney Spears Brittany Murphy Brooke Hogan Business Ideas Business News Calum Best Car News Car Photos Car Reviews Car Videos Carmen Electra Carrie Prejean Casey Johnson Celebrity Celebrity Nails Cheryl Cole China Chopper Lane Splitter Chris Rowe Christina Aguilera Christina Hendricks Cindy Crawford Clinton Clip COMEDY Coming Soon Comment faire un Avion en papier Companies Courtney Love Credit Cards Dalene Kurtis Daniel Baldwin Daniel Mica David Beckham David Hasselhoff Deborah Caprioglio DietFitness Drawing & Coloring Earthquake Economy Eirik Solheim Entertainment Eva Mendes Facebook Facebook-Games Farmville Fastion Forex Funny Game Game Info Game News General Motors Gold Golden Globes Haiti Halle Berry Heather Mills Heidi Fleiss Holly Madison Hot Girls Hot News Hot Women How To How to Make How To Read A Forex Chart HOW TOs Insurance International Investing Ipad Iphone Isaiah Washington Jamie Lynn Spears Jenna Jameson Jennifer Hawkins Jennifer Hudson Jesse Metcalfe Jessica Sierra Jessica Simpson Jobs Jocelyn Wildenstein Joe Weisenthal Jonathan Rhys Meyers Kat Dennings Kate Moss Kate Winslet Katie Price Katie Rees Katy Perry Keeley Hazell Keith Richards Kelly Brook Kelly Clarkson Kendra Wilkinson Kiefer Sutherland Kim Kardashian Kirsten Duns Kiss Style KT Tunstall Laetitia Casta Lauryn Hill Leah Marville Leona Lewis Leonardo DiCaprio lesbian Lesbian-Questions Lil Kim Lily Allen Lindsay Lohan Liz Pulliam Weston Loan Centre Louis Navellier Lynda Carter Make Money Mariah Carey Marisa Miller Mary Kate Olsen Mayim Bialik Megan Fox Mel Gibson Michael Jackson Michael Vick Michelle Obama Michelle Rodriguez Miley Cyrus Mischa Barton Miss World Mobile and Internet Molly Sims Movie Info Movies Mutual Funds Nadia Fazlini Sharip Nail Art Tutorial Nail Samples Nails Naomi Campbell News Nicolas Cage Nicole Polizzi Nicole Richie O.J. Simpson Oirigami Useful Origami Origami Airplane Origami Animal Origami Animal Easy Origami Animal's Face Origami Boat Origami Box Origami Flowers Origami Useful Osama Bin Laden Owen Wilson Pamela Anderson Paper Airplane Paris Hilton Paula Abdul Paula Sladewski Personal Finance Pete Doherty Pete Wentz Play Game Online Police Porsche Quotes about Life Rachel Zoe Real Estate Rihanna Roseanne Bar Sara Barelles Scandal Sean Young Sexual Health Shakira Shannon Elizabeth Sharon Stone Shocking Sienna Miller Star Stocks Strange Story Stupid Celebries Susan Boyle Taiwan Tamil Tiger Tara Reid Teens Tiger Woods Tila Tequila Today's Big story Tom Cruise Tom Sizemore Top Game Top Video Toyota Trading Trailers Travel Twilight Vanessa Hudgens Victoria Beckham Video Women Women-Family Women-Health Women'sHeath World Trade Center

Learn This Lesson Once and Profit Many Times Over

10:28 AM

This is third part of my series on understanding "delta," in which I have been focusing on the benefits of trading in-the-money (high-delta) options and how time impacts option values.

If you missed them, check out Part I and Part II. This series could save or make you several thousand dollars (or more).

We're just starting to scratch the surface of how trading high-delta options can enhance your profitability.

Understanding delta could mean the difference between trading the right option contract that gives you low risk and high reward, or trading the wrong option contract that exposes you to unnecessary risk.

Just to refresh, delta is the ratio comparing the change in the price of the underlying asset (such as a stock or exchange-traded fund) to the corresponding change in the price of an option contract.

We have been talking about it, not so much as a tool or a calculation, but more as a concept. The goal is for you to have a clear understanding of the reasons option prices change the way that they do.

Once you "get" that, you'll understand how and why trading options actually holds less risk than trading stock.

I'll keep talking about it conceptually, because it is most important to understand the concept. And, if you sit here and try to figure out how to actually calculate delta on your own or what the calculation is, you would really be missing the forest for the trees.

How options react when they are a certain distance away from their strike (or exercise) price is what is important here.

By fully grasping the concept of delta, we understand why it pays to buy in-the-money options (giving you a higher delta) as opposed to trading riskier, lower-priced, out-of-the-money options.

by Chris Rowe

Post a Comment

[facebook][blogger]

Author Name

Xin chào mọi người

Contact Form

Name

Email *

Message *

Powered by Blogger.