By Katz, Jeffrey Owen.; McCormick, Donna L. - How to Get Started Day Trading Futures, Options, and Indicies
New digital applied sciences, in addition to new inventory index futures and suggestions, now enable commonplace traders to price successfully exchange complete inventory indexes online?if they comprehend the place to begin. the way to start Day buying and selling Futures and choice Indexes teaches starting investors every little thing they should comprehend, from number of and software program to establishing an account and putting trades, and is helping them achieve entry to this fascinating, fast paced, and very likely ecocnomic buying and selling chance. this straightforward, useful, and precious consultant, jam-packed with concrete examples and exact directions, offers a step by step technique appropriate for investors of all adventure degrees. worthy information comprise: *Finding info and on-line buying and selling provider prone *Mechanics of on-line buying and selling *Simple buying and selling recommendations
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New digital applied sciences, in addition to new inventory index futures and innovations, now permit ordinary traders to price successfully alternate complete inventory indexes on-line? in the event that they recognize the place to begin. the way to start Day buying and selling Futures and choice Indexes teaches starting investors every thing they should be aware of, from collection of and software program to establishing an account and putting trades, and is helping them achieve entry to this intriguing, fast moving, and probably ecocnomic buying and selling chance.
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Additional info for How to Get Started Day Trading Futures, Options, and Indicies
Previous page page_36 next page > < previous page page_37 next page > Page 37 Time value decays (time decay) as an option nears expiration, but increases with volatility. Day traders should generally buy options, not sell them, since there is little profit to be gained from the decay of time value in such short-term trading. The Greeks are measures of option behavior. Theta is the rate of time decay. Delta is the extent an option is expected to move in response to movement in the underlying. The theoretical fair value of an option is an estimation of what its cost should be given the current price and volatility of the underlying security, the time remaining to option expiration, the prevailing interest rates, and other factors.
The E-Mini, which trades electronically on GLOBEX, also has the S&P 500 index as its underlying security. But this contract is one-fifth the size of the standard S&P 500 futures contract. It controls the equivalent of 50 shares of the S&P 500 index, and moves $50 with each point of index movement. Besides contract size, in the sense used above, futures have a tick size, or minimum fluctuation. This is the smallest change that can occur in the price of a particular futures contract. 10. The tick value is the value, in dollars, of a minimum fluctuation.
The middle curve is of a contract with an intermediate amount of time left. As can be seen, the price of a futures contract varies linearly with the price of the underlying security. In addition, the decay of premium with the passage of time only affects the placement, but not the slope, of the curve depicting the price relationship. The difference < previous page page_21 next page > < previous page page_22 next page > Page 22 Figure 1-1. Relationship between price of commodity and price of futures contract.