Secret 54KNOW THE TRUE VALUE ADVANTAGE
К оглавлению1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1617 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67
68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101
102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118
119 120 121 122 123 124 125 126 127 128
The one thing I love about options over other investments is
that you can measure their value and the probability of profit
mathematically. That is not true of any other investments.
How do you measure the true value of a stock? There is too
much uncertainty in the future to do so, and the fact that stock
prices are all over the map each year demonstrates my point. How
do you evaluate the true value of your home or of gold or silver or
commodities, such as crude oil, corn and soybeans? We all try to
guess at their value, but no one knows. Options, due to the fact
they have a time limit and specific contract terms, can be measured
mathematically.
There are several models that can be used for this purpose.
One such model, the Black and Scholes model, won a Nobel prize
in Economics in 1997. Being that options are a surrogate for
their underlying instruments, the models are based on the cost
of holding the underlying security or futures. Even if you can’t
predict what the underlying securities and futures will do, having
these models at your side, you can develop strategies that will
show long term profits. Your goal is mathematically to identify
underpriced or overpriced situations and to pounce on such
opportunities.
Although most professionals mathematically analyze option
plays, most investors do not. I am always in search of that super
play on an over or undervalued option with an excellent risk-reward
picture. That is what successful option trading is all about.
THE COMPUTER CAN DISCLOSE THE TRUE VALUE OF AN OPTION.
The one thing I love about options over other investments is
that you can measure their value and the probability of profit
mathematically. That is not true of any other investments.
How do you measure the true value of a stock? There is too
much uncertainty in the future to do so, and the fact that stock
prices are all over the map each year demonstrates my point. How
do you evaluate the true value of your home or of gold or silver or
commodities, such as crude oil, corn and soybeans? We all try to
guess at their value, but no one knows. Options, due to the fact
they have a time limit and specific contract terms, can be measured
mathematically.
There are several models that can be used for this purpose.
One such model, the Black and Scholes model, won a Nobel prize
in Economics in 1997. Being that options are a surrogate for
their underlying instruments, the models are based on the cost
of holding the underlying security or futures. Even if you can’t
predict what the underlying securities and futures will do, having
these models at your side, you can develop strategies that will
show long term profits. Your goal is mathematically to identify
underpriced or overpriced situations and to pounce on such
opportunities.
Although most professionals mathematically analyze option
plays, most investors do not. I am always in search of that super
play on an over or undervalued option with an excellent risk-reward
picture. That is what successful option trading is all about.
THE COMPUTER CAN DISCLOSE THE TRUE VALUE OF AN OPTION.