[mokky_123]

Wondering if anybody dabbles in US options.... interested in buying, wanna know more how it operates, etc

Preferably somebody with first-hand experience using citibank's brokerage!

[mokky_123]

Guess i'll try bringing this to the subforum: investment instead =X

[blackgoofguy]

I believe you have to 'buy' services like that. They never come free

[moneygod]

Errr... just interested... have you started on stocks first? Just purely options trading can be dangerous...

[mokky_123]

Blackgoofguy: Im not needing those "services" as in advise when to buy/sell what to buy/sell... Just need to clarify some technicalities like how the procedure is done, how to set up the settlement/brokages account properly and all haha....

moneygod: Haven't started on stocks leh.... im not of legal age to open a trading account. U any first-hand experience can share share? hehe

[moneygod]

i think you should probably start on stocks or anything that has a gentler movement first instead of jumping in. also get your money management, mind and method correct. you can paper trade and backtest your methods to get a strategy correct. then maybe get your parents to open up an account in their name for you (NO MARGIN!)...

without a plan, you will be just a lamb waiting to be slaughtered since you are more likely to just bet on direction of the market.

suggested reading - Dr Alexander Elder, Vic Sperando and Martin Pring.

[mokky_123]

Well, i've started on forex trading for the past 3 years (live standard account), which is also in my parent's name. According to most people, they usually say forex already is much more volatile and "riskier" than stocks, so i guess it won't be too difficult to adapt to, except its more fundamentally affected than technically.

Things like trading mindset (discipline in follow strategies/overcoming greed etc) i believe is more or less same as forex trading ba...

About "margin".... i've heard of it, but browsing through citibank website i don't see such thing leh. According to what i'm reading, it says the full purchase amount MUST be available in my USD cash settlement account before i can even put through the transaction, following which the amount will be earmarked immediately, then debited T+3(or is it T+1) working days later.

What's "Dr Alexander Elder, Vic Sperando and Martin Pring"? a book?

haha.... im needing more help in account setup rather here though... And things like, for the USD cash settlment account, is there any initial deposit, maintance figure etc, similar to a savings account?

[mokky_123]

anyone...

[Gollum]

see if you can find the full tutorial called options university

[Dr_ARCHer]

An option is a derivative instrument in that its value is 'derived from/dependent on' another instrument. For a stock option, the underlying instrument is a stock. Standard option pricing theory says that the value of a stock option is dependent on five factors: the value of the underlying stock, the strike price of the option, the interest rate, the time to maturity of the option, and the stock volatility.

There are two basic type of options: a call option and a put option. A call option allows the holder to buy a stock at a predetermined price (known as the strike price), while a put option allows the holder to sell a stock at a predetermined price. In any option transaction, there will be a seller of the option (known as option writer) and the buyer of the option. A European option allows the holder to buy/sell the stock only at the maturity/expiry of the option, while an American option allows the holder to exercise it any time before expiry. A Bermudan option is somewhere in between in that it allows the holder to exercise the option at specific points in time.

A vanilla option has just very basic features, such as those described above. Typically, the strike price would be predetermined. Exotic options would have features which are different. For example, if the strike price is a function of average prices over a period (during the life of the option), the option would be a Asian or look-back option. For equities, range accruals are very common. Payoff is something like Notional x interest rate x N1/N2, where N1 is the number of days a stock is trading above/below/within a range, and N2 is the number of days in the observation period.

[isidore]

Originally Posted by Gollum

see if you can find the full tutorial called options university

i second that. it was my first entrance into the world of options trading. I do not think your forex trading experience will help you much here.

since you asked for methods, i advice that you (or your parents) set up a brokerage account with a US broker if you are serious. some of them will even offer advice and training as to how to trade options.

most of them offer a simulated trading account alongside, or you can find one for yourself free. do that first for a while before going in live.