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Thursday, June 26, 2008

Futures Options Series - Option Pricing - Volatility ... (VIDEO)

Challenge Accounts:

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

Personal Trading Thoughts: Had a nice short day trade yesterday on BAC (If you look over at my Twitter updates, you'll see it's one I played publicly)

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 ...

So, I had that series regarding Futures, and Commodity Futures. What about options on Futures? I've been discussing that on the blog lately.

Ok. 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. We discussed the first few components of an options value, in the delta, gamma and theta. Now, let's turn to the aspect of volatility and interest rates in the form of vega and rho.

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click this link to view the entry ...)

In the next video that deals with options, I'll begin to deal with strategies ...

* * *

Investing Account Balance: $215.11
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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