OptionsWise

If your gut tells you there is more to options trading than what’s commonly sold to traders; “1000% return in a day” or “big gains at a fraction of the money”, etc. then this forum is a must for you. There is definitely more to that cliché.

If you use derivatives in any form or are considering it, then you owe it to yourself to find out more.

I tell many investors and traders, options is merely a tool, you give it character. You use it to suit you, what you wish to achieve out of your money instead of fitting yourself and stocks into the pigeon-hole of certain options strategies.

Many claim options to be unpredictable. I beg to differ. Options strategies are most predictable. The strategies do how you set them out to do. The price of options may be more variable than its underlying (because there are 5 inputs to its price), but its character remains.  Call options go up if the underlying goes up and put options go up if the underlying falls, with other variables constant.

Do you know what is less predictable, though? YOU. How you will react, when you win and when you lose, the more you win, the more you lose. How you will decide when you were wrong in your original view, do you admit it or stick to it till you lose. You may think you know yourself and how you may react, I can tell you from experience that you actually don’t, until your money is on the line or when you are losing.

The book, “OptionsWise how to invest sensibly” hopes to give a neutral view to the use of options. The strategies are easy to follow with real life examples. Not only that, how one manages the risk of using the tool accompany each strategy.

GAIN seems to be the word that is synonymous in attracting people to options and on the other hand the word RISK keeps others away. Those who are level-headed will recognise that there are truths in both camps.

Success belongs to those who evaluate strategies from the RISK camp. By paying attention to risks and in learning how to minimise and manage them along the way, almost ensures gains to follow.

YOU give options character.

options-book

 

 

 

 

 

 

 

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3 thoughts on “OptionsWise

  1. nick chandler says:

    If I buy a XJO option can I sell it before the exercise date even though it’s European style settlement ? If so what is the difference between selling and exercising ? Is it just that somebody can’t asign an XJO option to the seller till expiry ? What economic difference does it make if you can sell it even though you can’t exercise it ?

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    • Yes! For European options which XJOs are, you can buy and sell anytime during the term or before expiry; you just can’t exercise your right if you were the buyer of European options until expiry.

      Whether you were a buyer of XJO put or call, you can’t exercise to cash settle the XJO contract until day of expiry.

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    • For XJOs – One big difference between selling and exercising happens on the day index options expire, which is third Thursday of expiry month.

      The settlement prices of XJO options are determined on the morning of expiry, based on the opening prices of stocks which constitute the XJO. Basically, one can only be a price taker on day of expiry. If you want to determine how much you want to sell your XJO options for, then it’s the day before expiry.

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