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Monday, June 23, 2008

Futures Options Series - Option Pricing - Strike Price ... In the Money ... Out of the Money ...

Challenge Accounts:

Investing Account Balance:
Stock / Futures Trading Balance: $825.61
Online Savings Balance: $32.22

Personal Trading Thoughts: Again, waiting to see if support holds on the e-mini ...

Personal Investing Thoughts: Overall, I'm just watching and waiting. Summer is here, and the market will be weaker. Many years, I turn my DRIP off in the summer, and receive straight cash. But not this summer. We've been in a bear market, and the market is offering bargain prices on many stocks. Therefore, my DRIP will remain on, so that I can accumulate more shares at better prices to DCA ...

Ok. We've gone through the Futures, and had a whole series on Commodity Futures. We discussed why options are valuable. We discussed what is meant by the term "Put" option, and "Call" option. We discussed the five components of pricing with the Black - Scholes model. Let's discuss the first two of those components in this video ...

Those first two components of an options price are called the "Delta" and the "Gamma". It should also be noted that your strike price? This is the entry point into the futures market if the option is exercised.

Tomorrow we will continue with a very important concept regarding time ...

* * *

Investing Account Balance: $213.64
Stock / Futures Trading Balance: $825.61
Online Savings Balance: $32.22

Total Trades: 4
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $65.50
Average Loss: $79.84
Accuracy Rate: 25%
Average Reward: $179.75
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Down - ($59.68)

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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