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Add You - Options Education: Financing the Calendar!
The economy is unpredictable. War is raging. People around the globe are expressing a renewed interest in re-evaluating priorities and rumor has it that humankind is embarking upon a major shift in consciousness. These are just a few of the reasons why adding a personal touch to your communications with customers and employees can lead to greater levels of success in today’s impersonal business environment.During the recent years of economic growth, many industries scrambled to keep up with a constant stream of new business. Buildings expanded, product lines grew and “mandatory” overtime became the norm. Customers were sometimes expected to overlook service and production delays due to an unusually high volume of business. Employees were often required to work extended hours to fulfill customer demands. Throughout these years of rising profits, many businesses promised customers and employees that the workload would return t
As a seller of this option, the most that you can make is the premium that you collected and your upside RISK is theoretically unlimited. If Gold is trading at $800 an ounce come December 2004 and you have not offset this option you are obligated to make delivery of Gold to the Option purchaser at the originally agreed upon price of $500 an ounce. Should this occur you would in effect have a loss of $300 per ounce on each contract that you sold. Not very attractive, especially since each Gold contract is 100 ounces in size. The loss becomes $30,000 per contract. That is a lot of risk!
The way to minimize RISK is to SPREAD it off against other OPPOSITE Options positions.
In the above example, let's say tha
A career as a rock star or television star is unattainable for most hopeful teens who dream of being in the spotlight. While many dream of being the next *NSYNC or Backstreet Boys sensation, this may be a little far-fetched. However, teens don’t have to give up their dream, at least not completely. Few star-struck teens actually realize how many careers are available in the entertainment production industry.Large numbers of people are needed to put on concerts, make film movies or animate cartoons. These are the people who work behind the scenes to make great entertainment. Careers in this industry are as varied as the people that work in them. There are a few careers available that many may overlook, such as: free lance illustrator, dance choreographer, set designers, writers, or 2d animation specialists. Below are just a few of the many fields available in the entertainment production industry and a short summary of what they do.
In his book, "Business Without Economists" author William J. Hudson submits a theory worthy of every traders consideration. (Particularly now with Y2K just around the corner) He states:
1) The demand for answers will always be greater than the supply.
2) Therefore, the price for answers will be high.
3) Therefore, a very large supply of answers will emerge.
4) Therefore, most answers will be false, especially when tested against reality.
I have this STATEMENT posted on my computer as a reminder to myself that markets are very humbling mechanisms. The key question that we as traders must continuously ask ourselves with regards to whatever trading strategy we enter into is, "What if I am right? And What if I am Wrong?"
As I assess the economic landscape and scan the marketplace for trading opportunities there is one fact that I must pay attention to: The NAME of the GAME is Managing RISK!
With this in mind, let's evaluate some of the important facts:
Many of the Commodity Markets have bounced sharply from their twenty to thirty year lows.
When I cross reference this FACT with the REALITY that INFLATION is back in the economy, it creates some very interesting trading opportunities for the OPTION savvy trader. The key to any trading strategy in my opinion is that it HAS to be low risk because there are so many possible outcomes that may occur.
The purpose of this strategy is to eliminate the need for timing the market by developing a method minimizing my exposure to loss. Before I provide you with the mechanics of this tactic let me illustrate an outlandish possibility so that we can get clear on a traders definition of RISK. Let's say that you are convinced that on March 1, 2005 that you think that Gold is going to be trading at $3,000 dollars an ounce. (I did say outlandish!) Based upon this scenario even if you wholeheartedly disagree, how could you trade this viewpoint and still take very little risk? Most people think that RISK is defined as BEING RIGHT or WRONG on the outcome of a trade. However, a risk sensitive trader is only concerned with their exposure to chance of LOSS.
If you thought that Gold was going to be trading $3,000 an ounce you could enter into the marketplace and very inexpensively purchase a couple of Call Options that would give you the right to purchase Gold at $500 an ounce. In this instance, the most that you could lose is the money that you put up to purchase the options and you would have the RIGHT but not the obligation to purchase Gold at $500 between now and March. However, just because you have LIMITED RISK you STILL have a great deal of EXPOSURE to LOSS. Reason being, that if GOLD does not get up to $500 you would lose all of the money that you put up to purchase the options.
The way that a professional would trade this scenario is that he would finance the trade through OPTION SELLING. When you SELL an OPTION you are in effect creating an OBLIGATION that you are forced to abide by contractually. For example if you SELL a $500 December Gold Call and receive money you have in effect agreed to deliver Gold to the option purchaser at a price of $500 between now and December 2004.
As a seller of this option, the most that you can make is the premium that you collected and your upside RISK is theoretically unlimited. If Gold is trading at $800 an ounce come December 2004 and you have not offset this option you are obligated to make delivery of Gold to the Option purchaser at the originally agreed upon price of $500 an ounce. Should this occur you would in effect have a loss of $300 per ounce on each contract that you sold. Not very attractive, especially since each Gold contract is 100 ounces in size. The loss becomes $30,000 per contract. That is a lot of risk!
The way to minimize RISK is to SPREAD it off against other OPPOSITE Options positions.
In the above example, let's say that
You've read all those job description want ads on the internet - is there really a person who has ALL those qualifications? Can they possibly exist?How about YOUR qualifications for the COMPANY? Do you want to work for them? Have you ever fully qualified an organization before pursuing a career option with them. Or have you just settled for a job?Here's a basic primer on how to make a choice for a career where you will strategically and uniquely fit.Are your functional strengths valued by the prospective organization? Objectively look at your functional strengths, these are core skills to build a career upon. If you said you have a great glove hand, but don't throw well, then 3rd base isn't an option! Try 1st base, or cricket, or bowling, or…Next, can you use your experiences outside the workplace to differentiate and dimensionalize you versus your competition - that is, what
2) Therefore, the price for answers will be high.
3) Therefore, a very large supply of answers will emerge.
4) Therefore, most answers will be false, especially when tested against reality.
I have this STATEMENT posted on my computer as a reminder to myself that markets are very humbling mechanisms. The key question that we as traders must continuously ask ourselves with regards to whatever trading strategy we enter into is, "What if I am right? And What if I am Wrong?"
As I assess the economic landscape and scan the marketplace for trading opportunities there is one fact that I must pay attention to: The NAME of the GAME is Managing RISK!
With this in mind, let's evaluate some of the important facts:
Many of the Commodity Markets have bounced sharply from their twenty to thirty year lows.
When I cross reference this FACT with the REALITY that INFLATION is back in the economy, it creates some very interesting trading opportunities for the OPTION savvy trader. The key to any trading strategy in my opinion is that it HAS to be low risk because there are so many possible outcomes that may occur.
The purpose of this strategy is to eliminate the need for timing the market by developing a method minimizing my exposure to loss. Before I provide you with the mechanics of this tactic let me illustrate an outlandish possibility so that we can get clear on a traders definition of RISK. Let's say that you are convinced that on March 1, 2005 that you think that Gold is going to be trading at $3,000 dollars an ounce. (I did say outlandish!) Based upon this scenario even if you wholeheartedly disagree, how could you trade this viewpoint and still take very little risk? Most people think that RISK is defined as BEING RIGHT or WRONG on the outcome of a trade. However, a risk sensitive trader is only concerned with their exposure to chance of LOSS.
If you thought that Gold was going to be trading $3,000 an ounce you could enter into the marketplace and very inexpensively purchase a couple of Call Options that would give you the right to purchase Gold at $500 an ounce. In this instance, the most that you could lose is the money that you put up to purchase the options and you would have the RIGHT but not the obligation to purchase Gold at $500 between now and March. However, just because you have LIMITED RISK you STILL have a great deal of EXPOSURE to LOSS. Reason being, that if GOLD does not get up to $500 you would lose all of the money that you put up to purchase the options.
The way that a professional would trade this scenario is that he would finance the trade through OPTION SELLING. When you SELL an OPTION you are in effect creating an OBLIGATION that you are forced to abide by contractually. For example if you SELL a $500 December Gold Call and receive money you have in effect agreed to deliver Gold to the option purchaser at a price of $500 between now and December 2004.
As a seller of this option, the most that you can make is the premium that you collected and your upside RISK is theoretically unlimited. If Gold is trading at $800 an ounce come December 2004 and you have not offset this option you are obligated to make delivery of Gold to the Option purchaser at the originally agreed upon price of $500 an ounce. Should this occur you would in effect have a loss of $300 per ounce on each contract that you sold. Not very attractive, especially since each Gold contract is 100 ounces in size. The loss becomes $30,000 per contract. That is a lot of risk!
The way to minimize RISK is to SPREAD it off against other OPPOSITE Options positions.
In the above example, let's say tha
“Your wish is my command.” Sounds easy isn’t it? Simply wish for it and I can get it. It is probably too easy and not much believe in it.The problem is most people do not believe. Or they do not believe enough. They do not have the passion. They want it but well if they do not get it, it is all right.If you thinkI do not have a car. I have to take a bus. I want to stop losing money in stocks. If you do not listen to me, you have to go outside.Guess what? “Your wish is my command”All the thoughts above are about things that you do not want. You get more of them because you focus on them and you do it very often.Focus on what you want. The positive side of what you want. Try these instead.I have a MPV(multi-purpose vehicle). I feel the steering wheel and I see myself driving the car. I see my kids, Zhi Yang and Zhi Hong, laughing and talking very loudly. They loved sitting in
The purpose of this strategy is to eliminate the need for timing the market by developing a method minimizing my exposure to loss. Before I provide you with the mechanics of this tactic let me illustrate an outlandish possibility so that we can get clear on a traders definition of RISK. Let's say that you are convinced that on March 1, 2005 that you think that Gold is going to be trading at $3,000 dollars an ounce. (I did say outlandish!) Based upon this scenario even if you wholeheartedly disagree, how could you trade this viewpoint and still take very little risk? Most people think that RISK is defined as BEING RIGHT or WRONG on the outcome of a trade. However, a risk sensitive trader is only concerned with their exposure to chance of LOSS.
If you thought that Gold was going to be trading $3,000 an ounce you could enter into the marketplace and very inexpensively purchase a couple of Call Options that would give you the right to purchase Gold at $500 an ounce. In this instance, the most that you could lose is the money that you put up to purchase the options and you would have the RIGHT but not the obligation to purchase Gold at $500 between now and March. However, just because you have LIMITED RISK you STILL have a great deal of EXPOSURE to LOSS. Reason being, that if GOLD does not get up to $500 you would lose all of the money that you put up to purchase the options.
The way that a professional would trade this scenario is that he would finance the trade through OPTION SELLING. When you SELL an OPTION you are in effect creating an OBLIGATION that you are forced to abide by contractually. For example if you SELL a $500 December Gold Call and receive money you have in effect agreed to deliver Gold to the option purchaser at a price of $500 between now and December 2004.
As a seller of this option, the most that you can make is the premium that you collected and your upside RISK is theoretically unlimited. If Gold is trading at $800 an ounce come December 2004 and you have not offset this option you are obligated to make delivery of Gold to the Option purchaser at the originally agreed upon price of $500 an ounce. Should this occur you would in effect have a loss of $300 per ounce on each contract that you sold. Not very attractive, especially since each Gold contract is 100 ounces in size. The loss becomes $30,000 per contract. That is a lot of risk!
The way to minimize RISK is to SPREAD it off against other OPPOSITE Options positions.
In the above example, let's say tha
It amazes me that in this day and age how some companies still do not understand the importance of good customer service. It seems many are focused more on saving money and less on keeping customers happy. Customer satisfaction leads to continued business, referrals, and customer loyality. Inadequate customer service does the exact opposite and ends up being an enormous burden on a company, which in the end will cost more in future sales and lost customers than what would have been saved in reducing support costs.Here is a perfect example. About six months ago I switched my telephone service over to a popular Voice-Over-IP provider. The savings for my family was be about $50 a month and with the explosion of cell phones, we have become less and less dependent on our home service anyway.It started out great, the representative that helped with the setup was terrific and the service worked just fine. A couple of months later I
If you thought that Gold was going to be trading $3,000 an ounce you could enter into the marketplace and very inexpensively purchase a couple of Call Options that would give you the right to purchase Gold at $500 an ounce. In this instance, the most that you could lose is the money that you put up to purchase the options and you would have the RIGHT but not the obligation to purchase Gold at $500 between now and March. However, just because you have LIMITED RISK you STILL have a great deal of EXPOSURE to LOSS. Reason being, that if GOLD does not get up to $500 you would lose all of the money that you put up to purchase the options.
The way that a professional would trade this scenario is that he would finance the trade through OPTION SELLING. When you SELL an OPTION you are in effect creating an OBLIGATION that you are forced to abide by contractually. For example if you SELL a $500 December Gold Call and receive money you have in effect agreed to deliver Gold to the option purchaser at a price of $500 between now and December 2004.
As a seller of this option, the most that you can make is the premium that you collected and your upside RISK is theoretically unlimited. If Gold is trading at $800 an ounce come December 2004 and you have not offset this option you are obligated to make delivery of Gold to the Option purchaser at the originally agreed upon price of $500 an ounce. Should this occur you would in effect have a loss of $300 per ounce on each contract that you sold. Not very attractive, especially since each Gold contract is 100 ounces in size. The loss becomes $30,000 per contract. That is a lot of risk!
The way to minimize RISK is to SPREAD it off against other OPPOSITE Options positions.
In the above example, let's say tha
How long have you been trying to make money online? If you have started for quite some times now, I am pretty sure you have read thousands of ad copies online and offline over your lifetime.You might have read an excellent ad copies especially that can make money online for you that made you buy right away and some that may have had a decent product, but had a poor ad copy that turned you away in an instant.Below, I have made a list of 5 deadly ad copy sins that I have made over the years that cost me $2,548. I would advise you to take note of this if you don’t want to make the same mistakes like I did.1. No compelling headlineThe number one factor to succeed in making money online is having a compelling headline. Headline can either break you or make money online for you. Example of a dead headline, "How To Start An Internet Business." Would not it be catchy if you turn it into, "How To Start An Internet Busin
As a seller of this option, the most that you can make is the premium that you collected and your upside RISK is theoretically unlimited. If Gold is trading at $800 an ounce come December 2004 and you have not offset this option you are obligated to make delivery of Gold to the Option purchaser at the originally agreed upon price of $500 an ounce. Should this occur you would in effect have a loss of $300 per ounce on each contract that you sold. Not very attractive, especially since each Gold contract is 100 ounces in size. The loss becomes $30,000 per contract. That is a lot of risk!
The way to minimize RISK is to SPREAD it off against other OPPOSITE Options positions.
In the above example, let's say that a trader purchased 1 March $500 Gold call Option for a premium payment of $6.00 an ounce ($600). Each Gold contract is 100 ounces so this trader would be paying $600 per option . The RISK here is very clearly defined as $600. However, if this same trader now SOLD (1) GOLD December $500 Gold Call Option (NOTE THAT THE DECEMBER OPTION WILL EXPIRE BEFORE the March Option) and collected a premium payment of $300 they have in effect reduced their initial risk to the difference between the $600 that they paid out and the $300 that they collected, or $300.
Let me outline what this trader has done. They have obligated themselves to make delivery of 100 ounces of Gold at a price of $500 an ounce between now and December and simultaneously they have the right but not the obligation to own 100 ounces of Gold at $500 an ounce between now and March. They have established a BULLISH CALENDAR position by SELLING a Call option in a nearby month and using the money that they collected in the sale of that option to finance their purchases of the Call Option in the deferred option expiration month.
What this strategy is in effect saying is that it is the traders opinion that Gold will make its move after December but before March. Although it does not appear very exciting now, should this anticipated disruption occur in that time frame a trader that positioned themselves in this style would be sitting in the drivers seat. Essentially they would be looking at a maximum risk exposure of $300 with the possibility of unlimited upside potential. (YES, I realize that with Gold at $430 at present time that possibility appears extremely remote.) However, it is this kind of trading tactic that makes a great deal of sense in markets that are trading at historical lows.
The key to successful trading is to minimize your risk as you acquire more information. The closer you get to option expiration the more information you will have regarding the feasibility of this tactic. The key however is that you played the game without exposing yourself to a great deal of DOWNSIDE. That my friends is the path to long term success in any highly leveraged transaction. As William J. Hudson stated, "Most answers will be false, especially when tested against reality!" Worth thinking about.
Just one more way to swing for the fences without taking a great deal of risk.
STUDY AWAY and let's be careful out there!
Dowjonesfully-
-Harald Anderson
http://www.eOptionsTrader.com.
THE RISK OF TRADING IS SUBSTANTIAL, THEREFORE ONLY "RISK" FUNDS SHOULD BE USED. The valuation of such may fluctuate, and as a result, clients may lose their original investment. In no event should the content of this website be construed as an express or an implied promise, guarantee or implication by anyone that you will profit.
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