Showing posts with the label range-trading-pdf

THE OPTIONS COURSE- Trading Techniques for Range-Bound Markets

THE OPTIONS COURSE Trading  Techniques for  Range-Bound  Markets A  large percentage of markets trend sideways within a consistent  trading range throughout the trading year. In many cases, you may  find stock shares or futures that have been trading sideways for  some time. While these markets do not produce much in the way of profits  for the traditional buy-and-hold stock trader, they do provide options  traders with amazing limited risk opportunities.  As previously discussed, option pricing includes time value and intrin sic value. The intrinsic value of an option is the value an in-the-money  (ITM) option has if it were exercised at that point.  For example, if I own an  IBM 70 December call option, and IBM is trading at $80, the option has $10  of intrinsic value.  This is due to the fact that the strike price of the call op tion is below the current trading price of the underlying asset. If the option  has a market price of $12, then the remaining $2 of the ca