Best commodity option trading books on physical education
It also means swapping out your TV and other hobbies for educational books and online resources. Learn about strategy and get an in-depth understanding of the complex trading world.
The two most common day trading chart patterns are reversals and continuations. Whilst the former indicates a trend will reverse once completed, the latter suggests the trend will continue to rise. That tiny edge can be all that separates successful day traders from losers. There are a number of day trading techniques and strategies out there, but all will rely on accurate data, carefully laid out in charts and spreadsheets.
It is those who stick religiously to their trading strategies rules and parameters that often yield results. Too many minor losses add up over time. Part of your day trading setup will involve choosing a trading account. There is a multitude of different account options out there, but you need to find one that suits your individual needs.
The brokers list has more detailed information on account options, such as day trading cash and margin accounts. Below we have collated the essential basic jargon, to create an easy to understand day trading glossary. Yes, you have day trading, but with options like swing trading, traditional investment, and binary options, how do you know which one to opt for?
Day trading vs long-term investing are two very different games. They require totally different strategies and mindsets. Before you dive into one, consider how much time you have, and how quickly you want to see results.
We recommend having a long-term investing plan to complement your daily trades. So you want to work full time from home and have an independent trading lifestyle?
If so, you should know that turning part time trading into a profitable job with a liveable salary requires specialist tools and equipment to give you the necessary edge. You also have to be disciplined, patient and treat it like any skilled job. Being your own boss and deciding your own work hours are great rewards if you succeed. Whilst it may come with a hefty price tag, day traders who rely on technical indicators will rely more on software than on news.
Whether you use Windows or Mac, the right trading software will have:. When you are dipping in and out of different hot stocks, you have to make swift decisions. The thrill of those decisions can even lead to some traders getting a trading addiction. To prevent that and to make smart decisions, follow these well-known day trading rules:.
Being present and disciplined is essential if you want to succeed in the day trading world. This site should be your main guide, but of course there are other resources out there to complement the material:. For the right amount of money, you could even get your very own day trading mentor, who will be there to coach you every step of the way.
Opt for the learning tools that best suit your individual needs, and remember, knowledge is power. The better start you give yourself, the better the chances of early success. This is especially important at the beginning. The other markets will wait for you. Even the day trading gurus in college put in the hours. You need to order those trading books from Amazon, download that spy pdf guide, and learn how it all works.
This is one of the most important lessons you can learn. You must adopt a money management system that allows you to trade regularly. Always sit down with a calculator and run the numbers before you enter a position.
One of the day trading fundamentals is to keep a tracking spreadsheet with detailed earnings reports. If you can quickly look back and see where you went wrong, you can identify gaps and address any pitfalls, minimising losses next time.
Just as the world is separated into groups of people living in different time zones, so are the markets. If you start trading on the Cac 40 at So, if you want to be at the top, you may have to seriously adjust your working hours. Should you be using Robinhood?
In the case of a call, the option owner buys the underlying stock. In the case of a put, the option owner sells the underlying stock. Exercise by exception processing - A procedure used by OCC as an operational convenience for clearing members.
Under these proceedings, OCC assumes a clearing member tendered exercise notices for options that are in-the-money by threshold amounts, unless specifically instructed not to do so. This procedure protects the owner from losing the intrinsic value of the option because of failure to exercise. Unless instructed not to do so, all expiring equity options held in customer accounts are exercised if they are in-the-money by a specified amount.
Exercise price - The price that the owner of an option can purchase call or sell put the underlying stock. Used interchangeably with strike or strike price.
Exercise settlement amount - The difference between the exercise price of the option being exercised and the exercise settlement value of the index on the day the index option is exercised. Expiration cycle - The expiration dates applicable to the different series of options. Expiration date - The date that an option and the right to exercise it cease to exist. Expiration Friday - The last business day prior to the option's expiration date during which purchases and sales of options can be made.
For equity options, this is generally the third Friday of the expiration month. If the third Friday of the month is an exchange holiday, the last trading day is the Thursday immediately preceding the third Friday. Expiration month - The month that the expiration date occurs. Fence - A protective strategy in which a written call and a long put are added to a previously owned long stock position, also referred to as a collar.
The options may have the same strike price or different strike prices. The expiration months may or may not be the same. An investor might also use the reverse a long call combined with a written put if he has previously established a short stock position in XYZ Corporation. Fill-or-kill order FOK - A type of option order that requires that the order be executed completely or not at all. A fill-or-kill order is similar to an all-or-none AON order.
The difference is that if the order cannot be completely executed i. Floor trader - An exchange member on the trading floor who buys and sells for their own account. Fundamental analysis - A method of predicting stock prices based on the study of earnings, sales, dividends, and so on. Fungibility - Interchangeability resulting from standardization.
Options listed on national exchanges are fungible, while over-the-counter options generally are not. Gamma - A measure of the rate of change in an option's Delta for a one-unit change in the price of the underlying stock. This is unlike a day order, which expires if not executed by the end of the trading day.
If not executed, a GTC option order is automatically cancelled at the option's expiration. For example, an owner of common stock may buy a put option to hedge against a possible stock price decline. Historic volatility - A measure of actual stock price changes over a specific period. See also Standard deviation. Holder - Any person who has made an opening purchase transaction, call or put, and has that position in a brokerage account.
Horizontal spread - An option strategy that generally involves the purchase of a farther-term option call or put and the writing of an equal number of nearer-term options of the same type and strike price. See also Calendar spread. Immediate-or-cancel order IOC - A type of option order that gives the trading crowd one opportunity to take the other side of the trade. After announcement, the order is either partially or totally filled with any remaining balance immediately cancelled.
Implied volatility - The volatility percentage that produces the best fit for all underlying option prices on that underlying stock. See also Individual volatility. For standard options, a call option is in-the-money if the stock price is above the strike price. A put option is in-the-money if the stock price is below the strike price. Index - A compilation of several stock prices into a single number. Index option - An option whose underlying interest is an index.
Generally, index options are cash-settled. Individual volatility - The volatility percentage that justifies an option's price, as opposed to historic volatility or implied volatility. A theoretical pricing model can be used to generate an option's individual volatility when the five remaining quantifiable factors stock price, time until expiration, strike price, interest rates and cash dividends are entered along with the price of the option itself.
Institution - A professional investment management company. Typically, this term describes money managers such as banks, pension funds, mutual funds and insurance companies. Intrinsic value - The in-the-money portion of an option's premium. Iron butterfly - An option strategy with limited risk and limited profit potential that involves both a long or short straddle , and a short or long strangle. An iron butterfly contains four options. It is equivalent to a regular butterfly spread that contains only three options.
Kappa - A measure of the rate of change in an option's theoretical value for a one-unit change in the volatility assumption. Lambda - A measure of leverage. Last trading day - The last business day before the option's expiration date during which purchases and sales of options can be made.
Leg - A term describing one side of a position with two or more sides. When a trader legs into a spread, they establish one side first, hoping for a favorable price movement in order to execute the other side at a better price.
This is a higher-risk method of establishing a spread position. Leverage - A term describing the greater percentage of profit or loss potential when a given amount of money controls a security with a much larger face value. For example, a call option enables the owner to assume the upside potential of shares of stock by investing a much smaller amount than that required to buy the stock.
Limit order - A trading order placed with a broker to buy or sell stock or options at a specific price. Listed option - A put or call traded on a national options exchange. In contrast, over-the-counter options usually have non-standard or negotiated terms.
Long option position - The position of an option purchaser owner which represents the right to either buy stock in the case of a call or to sell stock in the case of a put at a specified price strike price at or before some date in the future the expiration date.
This position results from an opening purchase transaction long call or long put. Long stock position - A position in which an investor has purchased and owns stock.
To buy on margin refers to borrowing part of the purchase price of a security from a brokerage firm. Learn More About Margin Mark-to-market - An accounting process by which the price of securities held in an account are valued each day to reflect the closing price or closing market quotes. As a result, the equity in an account is updated daily to reflect current security prices properly.
Market order - A trading order placed with a broker to immediately buy or sell a stock or option at the best available price. The investor usually obtains this information from a brokerage firm. However, for listed options and stocks, these quotes are widely disseminated and available through various commercial quotation services.
Market maker - An exchange member on the trading floor who buys and sells options for their own account and who has the responsibility of making bids and offers and maintaining a fair and orderly market. Market maker system competing - A method of supplying liquidity in options markets by having market makers in competition with one another. As an alternative to a specialist system, they are also responsible for making fair and orderly markets in a given class of options.
Market-on-close order MOC - A type of option order that requires that an order be executed at or near the close of trading on the day the order is entered. Market to Market Married put strategy - The simultaneous purchase of stock and put options representing an equivalent number of shares. This is a limited risk strategy during the life of the puts because the stock can always be sold for at least the strike price of the purchased puts. See also Black-Scholes formula. Naked or uncovered option - A short option position that is not fully collateralized if notification of assignment is received.
A short call position is uncovered if the writer does not have a long stock or deeper-in-the-money long call position. A short put position is uncovered if the writer is not short stock or long another deeper-in-the-money put. Net credit - Money received in an account either from a deposit or a transaction that results in increasing the account's cash balance.
Net debit - Money paid from an account either from a withdrawal or a transaction that results in decreasing the cash balance. Neutral - An adjective describing the belief that a stock or the market in general will neither rise nor decline significantly. Neutral strategy - An option strategy Or stock and option position expected to benefit from a neutral market outcome. The proportions of this strategy are subject to change based on prevailing interest rates.
Non-equity options include options on futures, indexes, foreign currencies, Treasury security yields, etc. Not-held order - A type of order that releases normal obligations implied by the other terms of the order. For example, a limit order designated as not-held allows discretion to the floor broker in filling the order when the market trades at the limit price of the order. In this case, there is no obligation to provide the customer with an execution if the market trades through the limit price on the order.
See also Discretio n and Market-not-held order. Also known as ask or ask price. One-cancels-other order OCO - A type of option order that treats two or more option orders as a package, whereby the execution of any one of the orders causes all the orders to be reduced by the same amount.
For example, the investor would enter an OCO order if they wished to buy 10 May 60 calls or 10 June 60 calls or any combination of the two which when summed equaled 10 contracts. Open interest - The total number of outstanding option contracts on a given series or for a given underlying stock. Open outcry - The trading method by which competing market makers and floor brokers representing public orders make bids and offers on the trading floor. Opening transaction - An addition to, or creation of, a trading position.
An opening purchase transaction adds long options to an investor's total position, and an opening sale transaction adds short options. An opening option transaction increases that option's open interest. Option - A contract that gives the owner the right, but not the obligation, to buy or sell a particular asset the underlying stock at a fixed price the strike price for a specific period of time until expiration.
The contract also obligates the writer to meet the terms of delivery if the owner exercises the contract right.
Option period - The time from when a buyer or writer of an option creates an option contract to the expiration date; sometimes referred to as an option's lifetime. Option pricing curve - A graphical representation of the estimated theoretical value of an option at one point in time, at various prices of the underlying stock. Option pricing model - The first widely used model for option pricing was the Black Scholes.
This formula can be used to calculate a theoretical value for an option using current stock prices, expected dividends, the option's strike price, expected interest rates, time to expiration and expected stock volatility. While the Black-Scholes model does not perfectly describe real-world options markets, it is still often used in the valuation and trading of options. Option writer - The seller of an option contract who is obligated to meet the terms of delivery if the option owner exercises his or her right.
This seller has made an opening sale transaction, and has not yet closed that position. Optionable stock - A stock on which listed options are traded. OCC provides central counterparty CCP clearing and settlement services to 16 exchanges and trading platforms for options, financial futures, security futures and securities lending transactions.
OTC option - An over-the-counter option is traded in the over-the-counter market. OTC options are not listed on an options exchange and do not have standardized terms. These are to be distinguished from exchange-listed and traded equity options, which are standardized.
For standard contracts, a call option is out-of-the-money if the stock price is below its strike price. A put option is out-of-the-money if the stock price is above its strike price. See also Intrinsic value and Time value. Overwrite - An option strategy involving the writing of call options wholly or partially against existing long stock positions.
This is different from the buy-write strategy that involves the simultaneous purchase of stock and writing of a call. See also Ratio write. Owner - Any person who has made an opening purchase transaction, call or put, and has that position in a brokerage account. Parity - A term used to describe an option contract's total premium when that premium is the same amount as its intrinsic value.
Parity may be measured against the stocks last sale, bid or offer. Payoff diagram - A chart of the profits and losses for a particular options strategy prepared in advance of the execution of the strategy.
The diagram is a plot of expected profits or losses against the price of the underlying security. When its owner exercises that option, there is delivery of that physical good or commodity from one brokerage or trading account to another. Pin risk - The risk to an investor option writer that the stock price will exactly equal the strike price at expiration that option will be exactly at-the-money.
The investor will not know how many of their written short options will be assigned or whether a last second move in the underlying will leave any long options in- or out-of-the-money.
The risk is that on the following Monday the option writer might have an unexpected long in the case of a written put or short in the case of a written call stock position, and thus be subject to the risk of an adverse price move.
Position trading - An investing strategy in which open positions are held for an extended period. Total price of an option: Often Erroneously this word is used to mean the same as time value. Primary market - For securities traded in more than one market, the primary market is usually the exchange where trading volume in that security is highest. Put option - An option contract that gives the owner the right to sell the underlying stock at a specified price its strike price for a certain, fixed period until its expiration.
For the writer of a put option, the contract represents an obligation to buy the underlying stock from the option owner if the option is assigned. Ratio spread - A term most commonly used to describe the purchase of an option s , call or put, and the writing of a greater number of the same type of options that are out-of-the-money with respect to those purchased. All options involved have the same expiration date. Ratio write - An investment strategy in which stock is purchased and call options are written on a greater than one-for-one basis more calls written than the equivalent number of shares purchased.
See also Ratio spread. Realized gains and losses - The net amount received or paid when a closing transaction is made and matched with an opening transaction. Resistance - A term used in technical analysis to describe a price area at which rising prices are expected to stop or meet increased selling activity.
This analysis is based on historic price behavior of the stock. The process of executing these three-sided trades is sometimes called reversal arbitrage. Rolling - A trading action in which the trader simultaneously closes an open option position and creates a new option position at a different strike price, different expiration, or both. Variations of this include rolling up, rolling down, rolling out and diagonal rolling.
The SEC is an agency of the federal government that is in charge of monitoring and regulating the securities industry. Secondary market - A market where securities are bought and sold after their initial purchase by public investors. Sector index - An index that measures the performance of a narrow market segment, such as biotechnology or small capitalization stocks. Series of options - Option contracts on the same class having the same strike price and expiration month.
For example, all XYZ May 60 calls constitute a series. Settlement - The process by which the underlying stock is transferred from one brokerage account to another when equity option contracts are exercised by their owners and the inherent obligations assigned to option writers. Settlement Date Settlement price - The official price at the end of a trading session. OCC establishes this price and uses it to determine changes in account equity, margin requirements and for other purposes.
Short option position - The position of an option writer that represents an obligation on the part of the option's writer to meet the terms of the option if its owner exercises it. The writer can terminate this obligation by buying back cover or close the position with a closing purchase transaction.
Short stock position - A strategy that profits from a stock price decline. It is initiated by borrowing stock from a broker-dealer and selling it in the open market. This strategy is closed covered later by buying back the stock and returning it to the lending broker-dealer. This is accomplished by managing the limit order book and making bids and offers for their own account in the absence of opposite market side orders.
See also Market maker and Market maker system competing. Special Memorandum Account SMA Spin-off - A stock dividend issued by one company in shares of another corporate entity, such as a subsidiary corporation of the company issuing the dividend. As orders, these opposite parts are entered and executed simultaneously in the hope of 1 limiting risk, or 2 benefiting from a change of price relationship between the two parts.
Standard deviation - A statistical measure of price fluctuation. One use of the standard deviation is to measure how stock price movements are distributed about the mean. Standardization - Interchangeability resulting from standardization. Stock dividend - A dividend paid in shares of stock rather than cash. Stock split - An increase in the number of outstanding shares by a corporation through the issuance of a set number of shares to a shareholder for a set number of shares that the shareholder already owns.
For example, a corporation might declare a 2-for-1 stock split. There will be a corresponding reduction in equity value per share. In this case, the new shares post-split will be worth one-half their previous value but the investor will own twice as many shares.
Stop order - A type of contingency order, often erroneously known as a stop-loss order, placed with a broker. It becomes a market order when the stock trades, or is bid or offered, at or through a specified price. See also Stop-limit order. Stop-limit order - A type of contingency order placed with a broker that becomes a limit order when the stock trades, or is bid or offered, at or through a specific price.
Straddle - A trading position involving puts and calls on a one-to-one basis in which the puts and calls have the same strike price, expiration and underlying stock.
When both options are owned, the position is called a long straddle. When both options are written, it is a short straddle.