Developing Multi-Agent Systems with JADE
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In options tradinga jade lizard is a custom option strategy which consists of a bear vertical spread created using call optionswith the addition of a put option sold at a strike price lower than the strike prices of the call spread. For one underlying security, same expiration jade examples book trading options, this strategy consists of buying a call option at one strike price, selling another call option at a lower strike price, then selling an OTM put option at a jade examples book trading options price lower than that of both call options, the addition of the sale of a put option is consistent with the expected move of the underlying and results in additional premium collected.
The jade lizard strategy takes advantage of the volatility skew inherently priced into options with naked puts trading richer in premium than naked calls and short call spreads trading richer in premium than short put spreads, this volatility skew effect allows the trader to collect more premium for the overall position and thus, increasing the position's probability of profit. A jade lizard may be created in reverse, in which case it is known as a twisted sister, the construction of a twisted sister consists of a bull vertical spread created with put options, along with the sale of a call option.
For one underlying security, a put option is sold at one strike price, and another put option is bought at a lower strike price, then an OTM call option is sold at a strike price higher than that of both put options, the addition of the sale of a call option is consistent with the expected move of the underlying and results in additional premium collected.
The jade lizard will almost always trade for a higher net credit than the twisted sister consisting of the same strikes. Another difference, which relates to the risk-tolerance of the trader, is that the jade examples book trading options call option in the Twisted Sister results in theoretical unlimited loss potential on the upside.
Meanwhile, losses on the Jade Lizard are limited to the difference between the strike price of jade examples book trading options short put and zero assuming the underlying trades for nil at the time of option expiration less the original option premium received for selling the Jade Lizard spread.
Option finance — The strike jade examples book trading options may be set by reference to the spot price of the underlying security or commodity on the day an option is taken out, or it may be fixed at a discount in a premium.
The seller has the obligation to fulfill the transaction — to sell or buy — if the buyer exercises the option. Both are commonly used in and by the old traded, when an option is exercised, the cost to the buyer of the asset acquired is the strike price plus the premium, if any.
When the option expiration date passes without the option being exercised, then the option expires, in any case, the premium is income to the seller, and normally a capital loss to the buyer. The owner of an option may on-sell the option to a party in a secondary market, in either an over-the-counter transaction or on an options exchange. The market price of an American-style option normally closely follows that of jade examples book trading options underlying stock, being the difference between the market price of the stock and the strike price of the option.
The ownership of an option does not generally entitle the holder to any rights associated with the asset, such as voting rights or any income from the underlying asset.
Contracts similar to options have been used since ancient times, the first reputed option buyer was the ancient Greek mathematician and philosopher Thales jade examples book trading options Miletus. When spring came and the olive harvest was larger than expected he exercised his options, in London, puts and refusals first became well-known trading instruments in the s during the reign of William and Mary.
Privileges were options sold over the counter in nineteenth century America and their exercise price was fixed at a rounded-off market price on the day or week that the option was bought, and the expiry date was generally three months after purchase.
They were not traded in secondary markets, film or theatrical producers often buy the right — but not jade examples book trading options obligation — to dramatize a specific book or script.
Lines of credit give the borrower the right — but not the obligation — to borrow within a specified time period. Many choices, or embedded options, have traditionally included in bond contracts. For example, many bonds are convertible into common stock at the buyers option, mortgage borrowers have long had the option to repay the loan early, which corresponds to a callable bond option.
Options contracts have been known for decades, the Chicago Board Options Exchange was established inwhich set up a regime using standardized forms and terms and trade through a guaranteed clearing house. Trading activity and academic interest has increased since then, Options are part of a larger class of financial instruments known as derivative products, or simply, derivatives.
A financial option is a contract between two counterparties with the terms of the option specified in a term sheet, Exchange traded options have standardized contracts, and are settled through a clearing house with fulfillment guaranteed by the Options Clearing Corporation.
Since the contracts are standardized, accurate pricing models are often available, the terms of an OTC option are unrestricted and may be individually tailored to meet any business need. Bear spread — In options trading, a bear spread is a bearish, vertical spread options strategy that can be used when the options trader is moderately bearish on the underlying security.
Because of put-call parity, a bear spread can be constructed using either put options or call options, if constructed using calls, it is a bear call spread. If constructed using puts, it is a put spread. A bear call spread is a profit, limited risk jade examples book trading options trading strategy that can be used when the jade examples book trading options trader is moderately bearish on the underlying security. It is entered by buying call options of a strike price. The loss is due to speculation that the price would go down, a bear put spread is a limited profit, limited risk options trading strategy that can be used when the options trader is moderately bearish on the underlying security.
Call option — A call option, often simply labeled a call, is a financial contract between two parties, the buyer and the seller of this type of option. The seller is obligated to sell the commodity or financial instrument to the if the buyer so decides.
The buyer pays a fee for this right, when you buy a call option, you are buying the right to buy a stock at the strike price, regardless of the stock price in the future before the expiration date. Conversely, you can short or write the call option, giving the buyer the right to buy stock from you anytime before the option expires.
To compensate you for that risk taken, the buyer pays you a premium, the seller of the call is said to have shorted the call option, and keeps the premium whether or not the buyer ever exercises the option.
Since the payoff of purchased call options increases as the price rises. If this occurs, the option expires worthless and the seller keeps the premium as jade examples book trading options. Since the payoff for sold call options increases as the price falls. All call options have the three characteristics, Strike price, this is the price at which you can buy the stock or the price at which you must sell your stock.
Expiry date, this is the date on which the option expires, or becomes worthless, premium, this is the price you pay when you buy an option and the price you receive when you sell an option. The initial transaction in this context is not the supplying jade examples book trading options a physical or financial asset, rather it is the granting of the right to buy the underlying asset, in exchange for a fee — the option price or premium.
Exact specifications may differ depending on option style, a European call option allows the holder to exercise the option only on the option expiration date. An American call option allows exercise at any time during the life of the option, Call options can be purchased jade examples book trading options many financial instruments other than stock in a corporation.
Options can be purchased on futures or interest rates, for example, a tradeable call option should not be confused with either Incentive stock options or with a warrant. An incentive stock option, the option to buy stock in a company, is a right granted by a corporation to a particular person to purchase treasury stock.
When an incentive stock option is exercised, new shares are issued, Incentive options are not traded on the open market. The Chicago Board of Trade established the Chicago Board Options Exchange inthe first exchange to list standardized, exchange-traded stock options began its first day jade examples book trading options trading on April 26, in a celebration of the th birthday of the Chicago Board of Trade.
Trading at CBOE is carried out by way of the exchanges Hybrid system, about 95 percent of CBOE orders are jade examples book trading options electronically, which equates to between 50 and 60 percent of the exchanges total business.
The remaining transactions, traded via open outcry, typically are large or complex institutional orders that use the skills of floor brokers to work the order to gain potential price improvement.
Bull spread — In options trading, a bull spread is a bullish, vertical spread options strategy that is designed to profit from a moderate rise in the price of the underlying security. Because of put-call parity, a bull spread can be constructed using either put options or call options, if constructed using calls, it is a bull call spread.
A bull call spread is constructed by buying an option with a low strike price. Often the call with the exercise jade examples book trading options will be at-the-money while the call with the higher exercise price is out-of-the-money. Both calls must have the underlying security and expiration month. If the bull call spread is done so that both the sold and bought calls expire on the day, it is a vertical debit call spread.
The options trader employing this strategy hopes that the price of the security goes up far enough such that the written put options expire worthless. If the bull put spread is done so that both the sold and bought put expire on the day, it is a jade examples book trading options credit put spread.
An ISBN is assigned to each edition and variation of a book, for example, an e-book, a paperback and a hardcover edition of the same book would each have a different ISBN. The ISBN is 13 digits long if assigned on or after 1 Januarythe method of assigning an ISBN is nation-based and varies from country to country, often depending on how large the publishing industry is within a country. Occasionally, a book may appear without a printed ISBN if it is printed privately or the author does not follow the usual ISBN procedure, however, this can be rectified later.
For example, the edition of Mr. Reeder Returns, published by Hodder inhas SBN indicating the publisher, their serial number.
An ISBN is assigned to each edition and variation of a book, for example, an ebook, a paperback, and a hardcover edition of the same book would each have a different ISBN. The ISBN is 13 digits long if assigned on or after 1 Januarya digit ISBN can be separated into its parts, and when this is done it is customary to separate the parts with hyphens or spaces. Separating the parts of a jade examples book trading options ISBN is also done with either hyphens or spaces, figuring out how to correctly separate a given ISBN number is complicated, because most of the parts do not use a fixed number of digits.
Some ISBN registration agencies are based in national libraries or within ministries of culture, in other cases, the ISBN registration service is provided by organisations such as bibliographic data providers that are not government funded. In the United Kingdom, United States, and some countries, where the service is provided by non-government-funded organisations.
From Wikipedia, the free encyclopedia. Options as a Strategic Investment 4 ed. New York Institute of Finance. Retrieved from " https: Since the contracts are standardized, accurate pricing models are often available, the terms of an OTC option are unrestricted and may be individually tailored to meet any business need 2. When an incentive stock option is exercised, new shares jade examples book trading options issued, Incentive options are not traded on the open market 4.
A bull spread can be constructed using two call options. Payoffs from a covered call. Payoff from buying a call. Payoff from buying a put. Payoff from writing a call.