Anyone made an Options Reference Guide??

[chreen]

Just wondering if any Options person has put together an Options guide for different strategies which would detail in summary form: Cant really find a quick reference that has all ...

Market View
Construction of Stragegy
Example
Profit
Risk
Breakeven
Volatility
Time Decay
Collateral
Synthetic
Payoff Diagram

Something similar to this . . . .
View:
Bullish to very bullish in the short term - the shares will rise above the strike price selected
Premium:
Paid
Creating:
Buy a call option
Example:
XYZ at $3.90 Buy 1 XYZ 4.00 call option at .20c
Profit:
Unlimited until expiry
Risk:
Limited to premium paid
Breakeven:
Strike + Premium Paid
4.00 + .20 = 4.20
Volatility:
Volatility increases: positive price effect on premium
Volatility decreases: negative price effect on premium
Time Decay:
Disadvantage - wasting asset as the option moves to expiry it will reduce in value
Collateral:
No
Synthetic:
The purchase of a put, while owning shares in XYZ - Long Underlying + Long Put

Considerations / Comments:

If the share does not rise as expected close position in order to recover somepremium - time value of the option
Close out before the last few weeks to expiration - time value will erode quickly
Exit position on an unexpected good move or close 50% and leave 50% in the position
As time passes decay reduces premium
Buy options with low implied volatility - don’t buy a call option with high implied volatility as when volatility reduces the option premium will also reduce
If the market stagnates the value of the option will decrease as time value falls
Buy call options with at least 4 weeks until expiry
Buy OTM call option if very bullish, buy ITM call option if less bullish
Be realistic in selecting a strike price - the OTM option will be cheapest, but also requires a large move in the share price for the strategy to be profitable
The more bullish the higher the strike should be
As a stock substitute: An investor who buys a call instead of purchasing the underlying stock considers the lower dollar cost of purchasing a call contract versus an equivalent amount of stock


Probably not . . . but just thought I'd ask.

 

[wayneL]

Chreen,

There are several books out there which contain reference guides of varying quality. e.g.=>

The Options Course - I don't like the book or the author, but it does have a reference section at the back.

Options as a Strategic Investment - Is considered one of the "bibles" of options, and although doesn't have a quick and dirty reference guide, it will supply any information required on any given strategy.

Also, have you tried the ASX site? I'm sure they would have something there.

 

[wayneL]

Considerations / Comments:

If the share does not rise as expected close position in order to recover somepremium - time value of the option
Close out before the last few weeks to expiration - time value will erode quickly
Exit position on an unexpected good move or close 50% and leave 50% in the position
As time passes decay reduces premium
Buy options with low implied volatility - don’t buy a call option with high implied volatility as when volatility reduces the option premium will also reduce
If the market stagnates the value of the option will decrease as time value falls
Buy call options with at least 4 weeks until expiry
Buy OTM call option if very bullish, buy ITM call option if less bullish
Be realistic in selecting a strike price - the OTM option will be cheapest, but also requires a large move in the share price for the strategy to be profitable
The more bullish the higher the strike should be
As a stock substitute: An investor who buys a call instead of purchasing the underlying stock considers the lower dollar cost of purchasing a call contract versus an equivalent amount of stock

Regarding this section. Personally, I would steer well clear of any reference guide that contains such a summary. I don't know whether those are your words or something picked up from somewhere else, and there is nothing inherently incorrect in it, but it contains more one persons opinion and trading philosophy, rather than the range of uses.

For instance: The more bullish the higher the strike should be I violently disagree with without further qualifying considerations.

As a stock substitute: An investor who buys a call instead of purchasing the underlying stock considers the lower dollar cost of purchasing a call contract versus an equivalent amount of stock - is a bad reason to buy a call, without further qualifying considerations.

Just my pedantic

 

[chreen]

Yes, not so interested in the last section - more the factual parts of each strategy as detailed in the top section. ASX has some info but not all areas are covered.