This was our latest newsletter for people looking to become futures and commodities brokers. You can sign up FREE on the right side bar of the blog for regular Broker News Updates.
Hello all to our FREE subscribers.
Since the age of day trading and investors of stocks using brokers less and less - on a transaction basis, traditional FINRA Series 7 brokers have found their incomes drop except those that work on FEES or % of assets managed vs transactions. Also the most successful brokers/advisers have a diversified business. Most Investors DO NOT understand or feel comfortable in the commodities - futures arena.
If you want to trade for WHALES! and actively, the market is in international commodities. Global Clients are waiting.
The License you need is the SERIES 3 - and this license does not require Sponsorship or Employment beforehand.
You can prepare and take this exam Mon-Sat on your own at hundreds of test centers in the U.S and International locations. Study Prep time is 1 month or less.
*** Futures and Commodities is rarely a "buy and hold" market. More Trading means More $ for you. ***
American Investment Training provides all students who begin the course with the registration form to take the exam whenever you are ready and the nearest test center locations to you. We also offer support during your study Prep. The Series 3 also looks great on a resume if you want to join a Futures and Commodities Firm. It's a BIG inter-market world out there. Learn to trade commodities and futures of all types. Gold, Silver, Oil and much more.
NO SPONSOR, JOB OR COMPANY AFFILIATION NEEDED TO SIT FOR THIS EXAM.
Study Prep can be online or Books and Software. Start Now and see. NO PRIOR KNOWLEDGE NEEDED. Also PERFECT for Self Traders who want to trade 24/7, if that is what you would like to do. WHY NOT LEARN WHAT BROKERS HAVE TO LEARN? Practical Strategies Included. Click below to view study options:
SERIES 3 BOOK AND CD COMBO for updated text manual and test generator CD.
MASTER the World Commodities and Futures Markets for More Commission and Action. Don't play Poker at 2:00am, Trade where exchanges are open and it's always open Somewhere!
Thank You,
American Investment Training
Wednesday, September 23, 2015
Thursday, September 3, 2015
Option Contracts - In the money and Intrinsic Value
Option contracts for the Series 3 exam. This post will discuss option contracts that are either in or out of the money. The Series 3 Licensing test will ask questions on this topic. The Series 7 exam will as well
in, at or out of the money
Call Options
A call option is purchased when a trader or investor anticipates the futures price to rise during the life of the contract.
A call option gives the holder the right to purchase the commodity at a specific price regardless of the price in the market. That price is called the strike price. The contract will cost a premium.
"in the money"
when the futures price, whether it's Gold or other commodity is higher than the strike price of the call option, that difference is the in the money amount. "in the money" does not mean profit. It could, but the in the money term is the difference only between the futures price in the market and the strike price. If a high premium was paid that exceeds that difference, the call is still in the money. If the option is in the money, the option is said to have "intrinsic value". So, for a call
the futures price minus the strike price is the intrinsic value.
"out of the money"
This is the opposite of in the money. For calls - since the purpose is the hope that the market will rise above the strike price, when it does not or fall below the strike price that difference would be the out of the money amount. You can profit several ways from a market decline (shorting the commodity, shorting the call, buying put options), but if you are long (buyer) of call options, a profit will only be there if the market rises. As with the in the money example, the premium does not play a role with in, at or out of the money. There is no intrinsic value for out of the money contracts. Regardless of the negative number, the Intrinsic Value will be ZERO.
"at the money"
When the commodity is the same price as the strike price, the call (or put for that matter) is considered "at the money".
These concepts all play into the marketabililty of the contract during it's life. Meaning, an option can be exercised, allowed to expire or they can be sold - traded at the current market price of the option. The is the sell side (bid) premium. If the investor feels the call option has little shot to recover it's profit possibility, he or she may want to trade out of it before it expires. Most options will decline in price as the expiration date nears.
All of these terms are tested on the Series 3 Exam, Series 7 Test or any NFA FINRA Exam where Options are part of the exam outline.
Series 3 Book and CD Combo Course
Online Series 3 Training
in, at or out of the money
Call Options
A call option is purchased when a trader or investor anticipates the futures price to rise during the life of the contract.
A call option gives the holder the right to purchase the commodity at a specific price regardless of the price in the market. That price is called the strike price. The contract will cost a premium.
"in the money"
when the futures price, whether it's Gold or other commodity is higher than the strike price of the call option, that difference is the in the money amount. "in the money" does not mean profit. It could, but the in the money term is the difference only between the futures price in the market and the strike price. If a high premium was paid that exceeds that difference, the call is still in the money. If the option is in the money, the option is said to have "intrinsic value". So, for a call
the futures price minus the strike price is the intrinsic value.
"out of the money"
This is the opposite of in the money. For calls - since the purpose is the hope that the market will rise above the strike price, when it does not or fall below the strike price that difference would be the out of the money amount. You can profit several ways from a market decline (shorting the commodity, shorting the call, buying put options), but if you are long (buyer) of call options, a profit will only be there if the market rises. As with the in the money example, the premium does not play a role with in, at or out of the money. There is no intrinsic value for out of the money contracts. Regardless of the negative number, the Intrinsic Value will be ZERO.
"at the money"
When the commodity is the same price as the strike price, the call (or put for that matter) is considered "at the money".
These concepts all play into the marketabililty of the contract during it's life. Meaning, an option can be exercised, allowed to expire or they can be sold - traded at the current market price of the option. The is the sell side (bid) premium. If the investor feels the call option has little shot to recover it's profit possibility, he or she may want to trade out of it before it expires. Most options will decline in price as the expiration date nears.
All of these terms are tested on the Series 3 Exam, Series 7 Test or any NFA FINRA Exam where Options are part of the exam outline.
Series 3 Book and CD Combo Course
Online Series 3 Training
Subscribe to:
Posts (Atom)