tailieunhanh - A Logical Approach to Actuarial Mathematics_9

Tham khảo tài liệu 'a logical approach to actuarial mathematics_9', tài chính - ngân hàng, tài chính doanh nghiệp phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | 18 Options talk 2 trading options 191 Some traders make only three or four trades per year. That means that they only execute six to eight times per year apart from adjustment trades. Most of the time they look for opportunities or they manage their position. This is a difficult approach to sell under the fixed income model because the trading firm has monthly expenses. The firm needs monthly revenue. I remember one prop trading firm based in Chicago that was doing very well but who sold out to a group of well-capitalised investors who didn t understand trading. Within a year the prop firm was out of business. Of course we hired a few of their traders. One tip I can give you is to keep your costs low - and that includes personal expenses. Then you ll have more patience because you ll worry less about meeting your monthly expenses. 19 Options talk 3 troubleshooting and common problems Investing with leverage Options are leveraged investments the risk return potential is far greater per amount invested than with standard investment strategies. It is there- options are leveraged investments fore advisable to apportion less capital than with standard investments unless you are very confident of your outlook. One of the most prudent options strategies for trading a straight call or put position is to determine the amount of stock or shares that you are comfortably able to afford then buy the number of call options that leverage the same number of shares and no more. The rest of your capital is then placed in a cash deposit. For example suppose you are bullish on a stock and you are considering paying 95 for 500 shares. You could instead pay 10 for 5 April 95 calls with 180 DTE and place the remainder in a six-month cash deposit. Your expenditure and cash deposit break down accordingly Amount to invest 95 X 500 47 500 Cost of options 10 X 100 X 5 5 000 Amount deposited in CD 85 X 500 42 500 Of course investors frequently leverage to a greater degree. The point to keep in