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  • At The Money | Online Stockmarket Trading Update
    on a grossed up yield of over 9 percent If you had purchased the ANZ stock on a breakout you could be holding the stock at a cost of around 22 05 There have been some wild gyrations over the subsequent months but for those buy and hold investors there is still hope utilise the Stock Repair Strategy to recover losses in your stock when that stock is expected to rise moderately near term The stock repair trade for ANZ was priced on September 7th 2011 when the October options had 48 days until expiry and ANZ shares were trading at 20 10 Trade Details Buy 1 contract of at the money ATM 2000 Oct11 call options for 0 96 contract for every 100 shares you own and then write sell 2 of the 2100 OCT11 out of the money OTM call options at 0 46 contract for every 100 shares you own This trade costs 4 cents contract to place and if you are exercised you will sell youf original share parcel at 22 00 5 cents shy of the purchase price Note cost calculations do not include associated transaction costs Chart 1 ANZ Stock Repair Trade You can plan and analyse your trade as shown above using the Derivative Profiler function in the Market Analyser software Trade Note The Stock Repair strategy simply involves buying 1 contract of at the money ATM call options for every 100 shares owned and then writing twice as many out of the money OTM call options The Stock Repair strategy costs next to nothing to put on and if the stock drops further the ATM calls simply expire with the OTM calls which completely offset each other causing no additional losses to your original stock position This strategy reaches its maximum profit potential when the stock price is equal to or greater than the strike price of the out of the money OTM options The goal of the ANZ trade is for ANZ to be trading above 21 00 at the October expiry so that the position is repaired with minimal or no loss Please note that ANZ is due to go Ex div around 4 Nov 11 around 0 74 cents per share so if the stock does not get exercised then the dividend will offer some comfort Using the Stock Repair Strategy the stock needs only move up by 5 to reach breakeven however the stock could drop 10 and the position s loss would be the same as if the Stock Repair Strategy was not implemented The Trade Options can be used in order to reduce your risk while still participating in potential profits from a significant move by the underlying stock Today we ve explained the Stock Repair Strategy which allows you to double down on your current losing position for minimal cost however your profits will be restricted to breakeven on the trade Note this strategy does not offer any protection to the downside In future articles

    Original URL path: http://blog.traderdealer.com.au/tag/at-the-money/ (2013-02-02)
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  • Financial Advisory | Online Stockmarket Trading Update
    Options Trading for All Types of Market Environments Friday August 12th 2011 Part 3 The Covered Call Collar The Covered Call Collar is an options trading strategy that traders can use to protect an existing position that has recently surged into a key resistance level Rather than simply taking profits on the share position and potentially missing out on future upside the trader enters into a Covered Call Collar This options trading strategy seeks to protect your existing share position while still participating in some of the upside for a minimal or no outlay The Covered Call Collar allows you to participate in some of the future gains up to the sold strike price while being protected by the put position Covered Call Collar ideal for participating in future gains while being protected on the downside If you are of the opinion that the stock is likely to sell off with little chance of breaking the key resistance level but you still want to hold on to it you could use a Covered Call Collar options strategy The Covered Call Collar strategy is similar to the protective put options strategy in that you also buy put options as protection The difference is that you will now finance the purchase of those put options with the proceeds from writing an equal number of out of the money call options The position will still protect you from losses below the strike price of the put options at minimal to no cost to yourself but it will also stop the position from profiting beyond the strike price of the short call options should the stock stage a rally That is you would miss out on a strong rally in exchange for putting on the protection of the put options for next to no cost apart from commissions of course Use a Covered Call Collar when you expect the share price to move modestly higher or pull back significantly from current levels Recent Trade Newcrest Mining NCM A recent trade which is yet to pay off was Newcrest Mining We initially entered the share position when the stock price broke above its 50 and 200 day moving averages around 38 50 It shot up soon after we entered the trade and has now been trading sideways for the past few weeks We considered a covered collar was appropriate for this position Based on technical analysis you can see from the chart that the 42 50 resistance level has held for over a year So we bought protection at 39 00 by buying 3900 SEP11 Put for 0 645 and then wrote the 42 50 SEP11 Calls for 0 775 We received a credit for this trade and the position remains open We are protected until September expiry down to 39 00 and profits will be capped at 42 50 Chart 1 Newcrest Mining Covered Call Collar Trade You can plan and analyse your trade as shown above using the Derivative Profiler option in the

    Original URL path: http://blog.traderdealer.com.au/tag/financial-advisory/ (2013-02-02)
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  • Newcrest Mining | Online Stockmarket Trading Update
    a standard drill rig These holes are to be cased and cored and we feel that the Coretrack GT3000 is best suited to undertake this work said Mr Collett Coretrack Limited is an ASX listed company that provides technical solutions to the energy industry in the form of down hole tools products and services Since the company s conception Coretrack has focused primarily on building its highly anticipated integrated core tracking tool the Core Level Recorder System CLRS and introducing the tool into the commercial market The company has accelerated its operations and growth plan by acquiring one of Australia s leading drill rig manufacturing drilling services companies Globe Drill Pty Ltd The Globe Drill acquisition has brought together two world class companies both at the forefront of producing superior products and services for the global energy sector www coretrack com au http www traderdealer com au fundamentals ckk Tags CKK Coretrack Drilling Mining Services NCM Newcrest Mining Posted in ASX Company News No Comments The Covered Call Collar Part 3 of Options Trading for All Types of Market Environments Friday August 12th 2011 Part 3 The Covered Call Collar The Covered Call Collar is an options trading strategy that traders can use to protect an existing position that has recently surged into a key resistance level Rather than simply taking profits on the share position and potentially missing out on future upside the trader enters into a Covered Call Collar This options trading strategy seeks to protect your existing share position while still participating in some of the upside for a minimal or no outlay The Covered Call Collar allows you to participate in some of the future gains up to the sold strike price while being protected by the put position Covered Call Collar ideal for participating in future gains while being protected on the downside If you are of the opinion that the stock is likely to sell off with little chance of breaking the key resistance level but you still want to hold on to it you could use a Covered Call Collar options strategy The Covered Call Collar strategy is similar to the protective put options strategy in that you also buy put options as protection The difference is that you will now finance the purchase of those put options with the proceeds from writing an equal number of out of the money call options The position will still protect you from losses below the strike price of the put options at minimal to no cost to yourself but it will also stop the position from profiting beyond the strike price of the short call options should the stock stage a rally That is you would miss out on a strong rally in exchange for putting on the protection of the put options for next to no cost apart from commissions of course Use a Covered Call Collar when you expect the share price to move modestly higher or pull back significantly from current levels Recent Trade Newcrest Mining NCM A recent trade which is yet to pay off was Newcrest Mining We initially entered the share position when the stock price broke above its 50 and 200 day moving averages around 38 50 It shot up soon after we entered the trade and has now been trading sideways for the past few weeks We considered a covered collar was appropriate for this position Based on technical analysis you can see from the chart that the 42 50 resistance level has held for over a year So we bought protection at 39 00 by buying 3900 SEP11 Put for 0 645 and then wrote the 42 50 SEP11 Calls for 0 775 We received a credit for this trade and the position remains open We are protected until September expiry down to 39 00 and profits will be capped at 42 50 Chart 1 Newcrest Mining Covered Call Collar Trade You can plan and analyse your trade as shown above using the Derivative Profiler option in the Market Analyser software MarketAnalyser also provides a payoff diagram for further trade analysis as follows Chart 2 The payoff diagram for the Newcrest Covered Call Collar trade Trade Note Newcrest NCM is still trading between the 39 00 and 42 50 option strike levels and only time will tell whether the share price will end up at expiry but we are protected until September expiry down to 39 00 and profits will be capped at 42 50 The Trade Options can be used in order to reduce your risk while still participating in potential profits from a modest move in the underlying stock Here we ve explained the Covered Call Collar strategy which allows you to participate in some of the future gains up to the sold strike price while being protected by the put position In future articles we will talk about the High Yield Covered Call strategy and the Stock Repair strategy which is particularly relevant to this market Utilise the features in the Market Analyser software to plan your trades for the particular options strategy using your specific trade selection criteria You will save time and potentially reduce your trading risk Sign up for a free 14 day software trial here By Michael Hevern Head of Research See Also Options Trading for All Types of Market Environments Part 1 The Protective Put Options Trading for All Types of Market Environments Part 2 The Covered Call For buy and sell recommendations on ASX listed companies register for a free trial of MDS Financial Research MDS Financial Advisory Services offers general advice on trading options to generate consistent steady income on your investment portfolio Call 1300 610 024 for further information Tags covered call Financial Advisory Market Analyser Newcrest Mining options options trading Trading Strategies Posted in ASX Trading News Trading Strategies 1 Comment ASX Company News Leighton Secures Two New Gold Mining Contracts Friday March 25th 2011 Leighton Contractors LEI have been awarded 2 new gold

    Original URL path: http://blog.traderdealer.com.au/tag/newcrest-mining/ (2013-02-02)
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  • Covered Buy Write | Online Stockmarket Trading Update
    entered when there was takeover speculation back in June We bought Fosters at 4 55 and wrote the 4 65 Jul11 Calls for 0 22 and closed the position on the 22 nd of June 2011 after the takeover bid was announced for a tidy 7 profit Investors who took advantage of our High Yield Covered Call strategy actually made 30 on the same trade This strategy will be discussed in a later article or you can call me on 1300 610 024 to talk about it further Chart 1 Fosters Covered Call Trade Took Profits on Takeover Announcement Covered Call Profile You can plan and analyse your trade as shown above using the Derivative Profiler option in the Market Analyser software Trade Note We could have made a higher return on the trade if we just bought the stock 14 return but by using the Covered Call strategy we reduced our risk as we were being paid 0 22 or 5 to wait for the bid to come along At the time we entered the trade Fosters was saying that they had not been approached by any interested party The Trade Options can be used in order to reduce your risk while participating in the profits from a significant move by the underlying stocks Here we ve explained the Covered Call strategy which is used to generate monthly rental income from your current stock position In future articles we will talk about the Covered Call Collar strategy which is similar to the protective put options strategy in that you also buy put options as protection and the Stock Repair strategy which is particularly relevant to this market Utilise the features in the Market Analyser software to trade plan your options trades for the particular options strategy using your specific trade selection criteria You will save time and potentially reduce your trading risk By Michael Hevern Head of Research See Also Options Trading for All Types of Market Environments Part 1 The Protective Put For Buy and Sell recommendations on ASX listed companies register for a free trial of MDS Financial Research MDS Financial Advisory Services offers general advice on trading options to generate consistent steady income on your investment portfolio Call 1300 610 024 for further information Tags covered buy write covered call covered call write MDS Financial options trading Trader Dealer Posted in Trader Dealer News Trading Strategies No Comments RSS Feed Twitter Follow Us Sign up to our free weekly e newsletter Feel inspired Start trading Recent Post Markets Cap Best January Performance for Over a Decade Weekly Market Wrap The Covered Call Collar Part 3 1 of Options Trading for All Types of Market Environments Stock Market Analysis Markets Cap Best January for Over a Decade Stock Market Analysis Traders Take Profits Stock Market Analysis Markets Reach Bull Market Territory Stock Market Analysis US Markets Ease Near All Time Highs Markets Higher As Investors Play Catch Up Weekly Market Wrap Investing in 2013 continued Part 9

    Original URL path: http://blog.traderdealer.com.au/tag/covered-buy-write/ (2013-02-02)
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  • MDS Financial | Online Stockmarket Trading Update
    30 on the same trade This strategy will be discussed in a later article or you can call me on 1300 610 024 to talk about it further Chart 1 Fosters Covered Call Trade Took Profits on Takeover Announcement Covered Call Profile You can plan and analyse your trade as shown above using the Derivative Profiler option in the Market Analyser software Trade Note We could have made a higher return on the trade if we just bought the stock 14 return but by using the Covered Call strategy we reduced our risk as we were being paid 0 22 or 5 to wait for the bid to come along At the time we entered the trade Fosters was saying that they had not been approached by any interested party The Trade Options can be used in order to reduce your risk while participating in the profits from a significant move by the underlying stocks Here we ve explained the Covered Call strategy which is used to generate monthly rental income from your current stock position In future articles we will talk about the Covered Call Collar strategy which is similar to the protective put options strategy in that you also buy put options as protection and the Stock Repair strategy which is particularly relevant to this market Utilise the features in the Market Analyser software to trade plan your options trades for the particular options strategy using your specific trade selection criteria You will save time and potentially reduce your trading risk By Michael Hevern Head of Research See Also Options Trading for All Types of Market Environments Part 1 The Protective Put For Buy and Sell recommendations on ASX listed companies register for a free trial of MDS Financial Research MDS Financial Advisory Services offers general advice on trading options to generate consistent steady income on your investment portfolio Call 1300 610 024 for further information Tags covered buy write covered call covered call write MDS Financial options trading Trader Dealer Posted in Trader Dealer News Trading Strategies No Comments The Protective Put Part 1 of Options Trading for All Types of Market Environments Friday July 8th 2011 Part 1 The Protective Put Options are a financial instrument that you can use for all types of market conditions whether you re hedging your stocks or looking to salvage a losing stock position Over the next weeks I ll be covering a number of commonly used options trading strategies that you can execute without any margin requirement Today we will look at the Protective Put Protective Put it s like buying insurance for your stock position If you are of the view that a stock may start to recover but you still want some protection in case it continues to fall you could use what is known as a Protective Put strategy in order to stop your position from making further losses The Protective Put strategy simply involves buying 1 contract of put options for every 100 shares that you own at a strike price below the level at which you do not want to own the stock The Protective Put options strategy not only protects your stock position if the price goes down further it keeps the upside open so that if the stock turns around and rallies you will not miss out on the move An example of a protective put situation would be News Corp The stock is trading into resistance at the moment and if for some reason you did not want to sell your News Corp holdings you could by a protective put If you bought the stock at 16 00 you could buy the Aug11 17 00 Put for 0 17 This would protect your position down to 16 83 17 00 0 17 thereby locking in profits on your position and protecting your downside risk at the same time This can be analysed using the Derivative Profiler option in the Market Analyser software The Market Analyser software allows you to modify the prices to reflect the current price and provides Profit Loss diagrams for your strategy If you are more convinced that the News Corp share price is about to fall then you should simply sell the stock and buy the put outright for far more superior returns while only risking the premium you paid for the put The Trade Options can be used to reduce your risk while participating in the profits from a significant move by the underlying stocks The Protective Put is simply buying insurance for your stock position In our next article we will talk about the Covered Calls for generating monthly rental income from your current stock position Utilise the features in Market Analyser to plan your options trades for the particular options strategy using your specific trade selection criteria You will save time and potentially reduce your trading risk By Michael Hevern Head of Research For Buy and Sell recommendations on ASX listed companies register for a FREE trial of MDS Financial Research MDS Financial Advisory Service offers general advice on trading options to generate consistent steady income on your investment portfolio For further information please call 1300 610 024 Tags Financial Advisory Market Analyser MDS Financial MDS Research options Protective Put Trader Dealer Trader Dealer News Trading Strategy Posted in Trader Dealer News Trading Strategies No Comments ASX Company News MDS Financial Enters Joint Venture With Conrad Group Friday July 8th 2011 MDS Financial Group Limited MWS is pleased to announce a strategic alliance with The Conrad Group a global professional services firm that specialises in providing emerging market investment and strategic advisory services The alliance will enable both firms to jointly develop initiatives and products in the resource and property sector while leveraging their extensive experience in Asia and Latin America MDS Financial Group Chairman Sean Rothsey is excited about the new strategic alliance and its role in the international expansion plans of the MDS Financial Group This new partnership is an important step for the MDS Financial Group facilitating our international expansion plans and underlying the strength in management expertise within the Group The Conrad Group is a global professional services firm that provides emerging market investment and strategic advisory services The Conrad Group s seasoned investment and strategic consultants are recognised worldwide for their ability to identify investment and business opportunities in emerging markets analyse these opportunities with first world analytics and training seize the opportunities and deliver maximum value for clients MDS Financial Group Ltd is one of Australia s premier suppliers of online trading charting and analysis software share market data wholesale trading and corporate advisory services Now with D2MX acquired March 2011 MDS Financial is an independent Australian owned trading participant in the ASX specialising in security execution and subsequent clearing through Penson Financial Services of cash equities and exchange traded options for wholesale clients MDS Financial also provides wholesale and intermediary Direct Market Access DMA broking services in Australia www mdsfinancial com au www traderdealer com au www boursedata com au www marketmood com au http www traderdealer com au fundamentals mws Tags Broking Financial Services Joint Venture MDS Financial MWS Posted in ASX Company News No Comments Stock Market Analysis Weekly Market Wrap Friday July 1st 2011 Underwhelming Quarterly Performance Despite Sharp Weekly Gains Greece was the word of the week as traders bet that the proposed resolution of the Greek debt crisis would get the tick of approval from the Greek parliament and the European banks alike Investors globally cheered as the German and French banks gave their commitment to extending the maturities of existing Greek loans and last weekend China promised its support in resolving the European debt crisis It should be noted however that the reprieve for Greece represents only a short term fix to a long term problem The resolution of the Greek debt crisis came just in time to enable markets to finish the quarter on a positive note However the ongoing worries about the Greek situation the ending of the QE2 and soft economic data have all contributed to the U S markets being down for seven out of the past eight weeks There has been a certain amount of window dressing as fund managers have been busily adjusting their portfolios around the quarter s end The true test will be if markets can follow through next week U S and Asian markets are testing their 50 day moving average resistance levels which could prove pivotal for next week s trading In Europe the major markets are actually trading above their 50 day moving average levels These levels need to hold for support near term Commodities prices have bounced off key levels this week and are ending the week higher with copper at an 8 week high U S Markets U S stock markets have ruled off the second quarter with a strong weekly performance Investor sentiment was buoyed by the German banks support for the Greek bailout the successful vote for the Greek austerity measures and promising Chicago area purchasing managers PMI data The Dow Jones Index finished higher for a fourth session and is up almost 500 points this week its biggest four day point gain since July The strong gains this week came from the energy technology material and industrial sectors which have eased the quarter s overall losses as they have all risen over 4 5 for the week The other theme we have seen this week has been a move into cyclicals including the industrials and material sectors away from the more defensive sectors Overnight the Dow Jones closed up 1 3 at 12 414 the S P 500 index closed up 1 0 at 1 320 the Nasdaq ended up 1 2 at 2 773 and the smaller cap Russell 2000 was up 0 9 European Markets European stock markets have ended the month on a strong note after a second positive vote in Greece on an austerity plan and the surprising U S PMI data The Stoxx Europe 600 index closed up 1 1 its fourth consecutive gain but the index is still down 2 9 for June German banks have now agreed to take part in a new aid program for Greece by accepting longer maturities for bonds that currently are due by 2014 helping the country avoid a default This follows a similar move by the French banks earlier in the week The European Central Bank President Jean Claude Trichet reiterated the view that the European Central Bank will raise interest rates at next week s meeting which could prove a drag on stocks Overnight in London the FTSE 100 index was up 1 5 at 5 946 the German DAX was up 1 1 at 7 376 while in France the CAC was up 1 5 at 3 982 Asian Markets Asian stock markets bounced this week as investors went bargain hunting ahead of the Greek vote The eventual resolution of the Greek situation has enabled fund managers to push the markets higher for the end of financial year with a certain amount of window dressing The QE2 cessation and the Greek sovereign debt crisis have been dominating the Asian markets in the past eight weeks Financials have bounced on the news of a resolution to the Greek situation while energy stocks have rebounded sharply this week as the crude oil price has been boosted by the prospect of improving global growth In Japan the market finished higher for the session but has been trading sideways for the past few months In Hong Kong the Hang Seng Index rallied but was down 5 4 for the month and it is the worst performer of the Asian benchmark majors for June In China the Shanghai Composite rose 0 6 for June and has recently bounced of a key support level around 2600 and has broken a down trend that has been in place since the mid April peak Overnight in China the SSE Composite was up 1 3 at 2 762 while in Hong Kong the Hang Seng Index was up 1 5 at 22 398 and in Japan the Nikkei 225 Index was up 0 2 at 9 816 The South Korean KOSPI was up 0 2 for the session while the Indian market was up 0 8 Our View The Australian share markets have rebounded strongly this week as the eventual resolution of the Greek situation has enabled fund managers to push the markets higher for the end of financial year The key test will be to see if we manage to follow through next week The S P ASX 200 index has bounced off its March lows and is now testing its 50 day moving average which is still below the 200 day moving average Look for the market to consolidate its gains near term and monitor the progress of the proposed carbon and mining resource taxes If commodities particularly copper can remain above these key levels then that will help our miners too and banks are attractive on a yield basis The S P ASX 200 is currently trading at 4610 and is trying to finding resistance around these levels 4630 to 4700 Key levels for the index next week will be 4660 and 4450 By Michael Hevern Head of Research Tags Asian Markets ASX ASX News Business News European Markets Greece Greek Debt MDS Financial Stock Market Analysis Trader Dealer trading US Market wrap Posted in Stock Market Analysis Trader Dealer News No Comments Stock Market Analysis Weekly Market Wrap Friday June 17th 2011 Spectre of Greek Default Spooks Global Markets Traders headed for the exits this week as the sell down continued Investors were cautious as data remained soft in the U S and in Asia and the spectre of a debt restructure default in Greece is dominating investor sentiment Globally markets have continued to be plagued with concerns over the sovereign debt issues in Europe particularly in Greece Asian markets have also been dragged lower by reports showing that Japan is in a recession that Chinese growth is slowing near term and by an increase in capital reserve requirements hitting the Asian banks Commodities prices have also been under pressure this week due to concerns over the faltering global economy Australian Market The ASX All Ordinaries and the S P ASX 200 have experienced selling again this week The Aussie market continues to test the key support levels of its March lows and is trading at the lower end of its falling channel formation It is crucial that support holds at these levels otherwise we could see the market test 4200 near term Australian shares are starting to show some value but investors are unlikely to rush to open new positions until the situation in Greece is resolved Miners have suffered due to concerns about economic growth near term and energy stocks have been weak as crude oil tests US95 per barrel but banks are starting to look good on a yield basis The focus is on Greece at the moment but there are also domestic headwinds continuing to confront investors including the poor GDP figures slowing jobs data the mining tax and the possible carbon tax all of which are weighing on sentiment U S Markets U S stock markets are trading lower for a seventh week Financials have led the fall but material and energy stocks also fell as economic worries continued to weigh on sentiment dragging the indices down again Investors continue to be wary of risk as the Greek debt crisis remains unresolved A Greek default would be fractious to the European Economic Union with global ramifications on financial systems leading to massive losses for creditors and impacting on the global economic recovery Defensive sectors such as utilities and consumer staples components provided some support Overnight U S stock markets ended mixed after a late session rally The Dow Jones Index ended higher after recovering from 3 month lows while the S P 500 and the Nasdaq again closed around their lows for the year The U S dollar jumped higher in a flight to safety which put pressure on commodities prices The Dow Jones closed up 0 5 at 11 961 the S P 500 index closed up 0 2 at 1 265 the Nasdaq ended down 0 3 at 2 624 and the smaller cap Russell 2000 was up 0 3 European Markets European stocks have continued to weaken this week as worries about Greek finances and the health of the U S economy again weighed on sentiment The Greek ASE index slumped as the country was practically shut down on Wednesday by a 24 hour general strike to protest new austerity measures and demonstrations in Athens turned violent Greek bonds were trashed sending yields to their highest levels since the inception of the euro as euro zone officials failed to make progress on discussions about aid to Greece Elsewhere the Irish budget minister warned of more budget cuts and the European Central Bank warned that contagion from the euro zone s debt crisis remains the top risk to financial stability in the EU bloc while reiterating their opposition to a Greek debt restructure The S P Ratings Agency cut Greece s sovereign rating to junk territory cutting it to CCC from B the lowest in the world rather focusing on the likelihood that euro zone officials will reach a deal to help the nation avoid a default Investors continued selling as the week unfolded even as the European Union and the International Monetary Fund said that the next tranche of Greek aid is likely to be approved at a meeting of euro zone finance ministers on Sunday A second bailout package for Greece and a decision on the nature of private sector involvement is scheduled for early July Banks were under pressure again across the region with the National Bank of Greece and Alpha Bank each down more

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  • Options Trading | Online Stockmarket Trading Update - Part 2
    out of the money option will normally provide the biggest return coupled with the biggest downside if the trade does not go in the direction the trader expected Trading Puts There are two main reasons that a trader would trade put options The first is if the trader wanted to profit from a fall in value in the share A put option increases in value as the underlying share falls allowing a trader to buy the options and sell it at a higher price Put options like call options are wasting assets The trader must pick both the direction and timing to enter the trade Strong returns can be made trading put options when shares fall away rapidly as they did in January 2008 It is important that the expiry date that is chosen provides the trader with enough time for the move to play out so they can benefit from it A share moving sideways or upwards is going to cost the trader money Investors may want to employ put options as a protection mechanism for their portfolio The put option increases in value as the share drops but it also gives an investor the right to sell their shares at the exercise price If you owned WBC shares and were concerned that the shares might drop you could purchase put options as protection If you were correct and WBC did drop you now have the right to sell WBC at the exercise price of the put option Alternatively you could sell the put option for a profit and continue to own the shares This is known as hedging Adding put options to your trading toolkit offers you the flexibility to profit in different market conditions Share traders are limited to making money from a rising share price but options traders just want the share price to move By Jeff Cartridge Education Manager Sign up for a FREE trial of The Bourse today The information provided within this blog is general advice only and you should consult the services of a financial professional in order to ascertain whether the information is applicable to your investment strategies and risk profile Tags ANZ call options options options trading put options shares the bourse Trader Dealer trading puts WBC Posted in Trader Dealer News Trading Software 1 Comment Word from the nerd Wednesday June 17th 2009 Development on our new systems for providing Market Data is coming along well The team has spent the last month integrating broking support into the system It s now possible to create amend cancel orders and to view holdings and cash account information through the new system Furthermore the system now supports accepting market data from a variety of sources but making them available all from within the same standard environment This means that we can push in Futures Options Equities FX and Commodities data from many differing points of origin but have our software products handle them with little customisation or specialisation Finally the first

    Original URL path: http://blog.traderdealer.com.au/tag/options-trading/page/2/ (2013-02-02)
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  • Identifying Overbought and Oversold Conditions in d2mxIRESS | Online Stockmarket Trading Update
    for about a month then use a longer timeframe something nearer to 20 25 days The shorter timeframes will allow the indicator to fluctuate more rapidly back and forward between the extremes and will provide more signals of overbought or oversold The Stochastic indicator is usually plotted with a signal line similar to the MACD indicator along with the two reference levels at 80 and 20 The blue dotted line is a moving average of the red stochastic line and is referred to as the D in the chart properties As with the RSI this indicator is overbought when it crosses above the top signal line and oversold when it crosses below the lower signal line The crossover between the indicator K and its signal line D can be used as a buy or sell signal We can test how well trading overbought or oversold signals works using the Trading System tool located under the D2MX Trade Tools menu The following setup uses the Commodity Channel Index CCI oscillator which fluctuates between 100 and 100 The entry signal is to buy shares when the 21 day CCI indicator is below 70 and sell shares when the share hits a 3 trailing stop This strategy will be traded on the top 20 Australian companies ASX20 with 5000 placed on each trade The test will be run over the last 10 years from 2002 2012 The results below show how the strategy performed Overall it has been profitable with strong gains through the bull market from 2002 2007 It did lose money late in 2007 and into 2008 but remember the strategy trades long only and the markets did fall heavily during this time Recently the performance has improved with good results so far in 2012 You can test out the other indicators or alter the parameters of this indicator and view the results for yourself in the D2MX Trading System Get your FREE TRIAL here Now you know how you can identify overbought or oversold conditions in a share and you can test how well different indicators work using the Trading System tool in the D2MX Trade Tools plugin Trading overbought or oversold signals can work very well as seen from the result of just one test we have run here The new d2mxIRESS platform gives you the tools to build your own trading strategy By Jeff Cartridge Education Manager Tags charting d2mx charts d2mxiress Iress Oscillators technical analysis technical indicators Trading Strategies trading systems Stock Market Analysis Traders Take Some Profits After Stellar Week Weekly Market Wrap Traders Take Some Profits After Stellar Week This entry was posted on Friday October 19th 2012 at 12 55 pm and is filed under Trading Software Trading Strategies You can follow any responses to this entry through the RSS 2 0 feed You can leave a response or trackback from your own site Leave a Reply Click here to cancel reply Name required Mail will not be published required Website RSS Feed Twitter

    Original URL path: http://blog.traderdealer.com.au/2012/10/19/identifying-overbought-and-oversold-conditions-in-d2mxiress/ (2013-02-02)
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  • Charting | Online Stockmarket Trading Update
    Friday October 5th 2012 The basis of technical analysis is to identify a trend and then trade in that direction There are a number of different ways to identify a trend and today we will take a look at some of the tools in the D2MX Chart system that can assist you with this process D2MX Charts are part of the D2MX Trade Tools plugin available in the d2mxIRESS Bourse and Market Analyser platforms The simplest way to identify a trend is to take a look at the bars or candlesticks on a D2MX chart A series of green candles or bars show a rising trend while a series of red candles or bars show a falling trend Using this simple analysis allows you to quickly identify a trend It works particularly well in longer timeframes like weekly or monthly as some of the noise is filtered out Taking trend analysis one step further we can take a look at the definition of a trend which was created by Charles Dow who also created the Dow Jones Index This is known as Dow Theory and states an uptrend is defined as a series of higher lows and higher highs A downtrend is defined as a series of lower highs and lower lows At a transition between trends the share fails to make a higher high and forms a lower high This is not yet a downtrend until it breaks below the previous low blue line to form a lower low From this point on there is now a downtrend in place You can also use trend lines to define the direction of a trend A downtrend line is drawn above the share price joining up as many of the highs as possible This line is then monitored for a break to the upside signalling a change in trend An uptrend line can be drawn underneath the share price joining as many lows as possible A break in this line signals a change in trend A word of caution however a break in a steep downtrend line may just mean the share is no longer going down as fast as it was Take a look at the chart below for an example of a break in the downtrend in GRY The initial breakouts did not signal the start of a new uptrend instead the share is no longer falling as fast A break of a flat trend line close to horizontal is better as the share price has no choice but now to move higher Other than just looking at the chart and the candles you can use indicators to identify trends as well The most common of these is the moving average If the share price is above average it is rising and if it is below average it is falling While this simple definition can work it is more common for two moving averages to be combined to identify a trend When the faster moving average red line is above the slower moving average blue line then the share is in an uptrend and when the moving averages turn down and the faster crosses below the slower average the share is now in a down trend One more indicator that is widely used to define a trend is the MACD Before a moving average crosses over the two averages must come closer together The MACD is an indicator based on the distance between two moving averages The MACD was originally calculated as the difference between a 26 period and a 12 period moving average red line A signal line of 9 periods blue line is then used to provide a crossover signal similar to that which occurs in a moving average The indicator is also displayed in the chart below as a histogram with bars above and below the zero line We have looked at a number of different ways here to define a trend It is obviously not possible and certainly not recommended to use all of these approaches Choose one that you are comfortable with and then stick with it Jeff Cartridge Education Manager Tags charting d2mx chart moving averages technical analysis technical indicators Trading Software Trading Strategies Posted in Trading Software Trading Strategies No Comments Candlestick Charting With D2MX Charts Friday September 21st 2012 There are a number of different ways you can view price data in the new D2MX charts You can look at lines bars point and figure swing charts or candlesticks These are all accessible from the buttons at the top of the chart window Today we will take a look at the candlesticks and how to interpret a chart when it is displayed in this way The Basics A candle is made up of two parts a body and a line on the top or the bottom of the candle known as a shadow Candles display the data for the time period that is being viewed If you are looking at a daily chart there will be one candle per day if you are looking at a 5 minute intraday chart there will be one candle every 5 minutes The body of the candle shows the price movement from the open to close for the time period The body of the candle can either be open as in the green candles in the chart above or shaded in shown by the red candles An open candle means the price was higher at the close than it was at the open A solid candle means the price was lower at the close than the open In the charts here the candles are coloured green for up and red for down Candles can however be black and white and still provide the same information You can alter the colours of the candlesticks in the D2MX charts if you choose with a right click on the chart click Chart Properties and scroll down to the Colour Settings The shadow on the top of the candle

    Original URL path: http://blog.traderdealer.com.au/tag/charting/ (2013-02-02)
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