Understanding Stock Options Information Essay Example | Topics and Well Written Essays - 2250 words

Understanding Stock Options Information - Essay Example Understand how accumulation or distribution (Accumulation, the buying of stock, distribution is the sale of stock.), forecast the future expectation of stocks or options. Ascending and Descending tops P. 15 International Encyclopedia of Technical Analysis Page 15 and 16,), these illustrations show ascending and descending price top transitions, from time period- to- time period, that trail stock directions.Volatility charts show extremes —specifically, option volatility charts show relationships between puts, calls, strike prices, and expiration dates. Assumption associations are derived from historical patterns, price patterns,and supply and demand relationship. Historical relationships signal the likeness of direction, whereas, price patterns point to quantity of decrease and increase. â€Å"Market factors (Interest rate changes, economic conditions, political factors, announced pending acquisitions.), are already incorporated into current market price per share. If demand exceeds supply, the stock price will increase, and vice versa.†(International Encyclopedia Page 16 and 17, J. Siegel, J. Shim, A Qureshi, J Brauchler). Charts are technical, and fundamentals play little or no roll when the technician makes decisions to buy or sell. He’s only interested in charts — usually 50 or 200 day moving average charts, volume, and the accumulation or distribution of a stock. WHAT ARE OPTIONS?Options have basic uses. One, to hedge—using options to safeguard against the underlying stock reducing in value.... Understand how accumulation or distribution (Accumulation, the buying of stock, distribution is the sale of stock.), forecast the future expectation of stocks or options. (Ascending and Descending tops P. 15 International Encyclopedia of Technical Analysis Page 15 and 16,), these illustrations show ascending and descending price top transitions, from time period- to- time period, that trail stock directions. Volatility charts show extremes -specifically, option volatility charts show relationships between puts, calls, strike prices, and expiration dates. Assumption associations are derived from historical patterns, price patterns, and supply and demand relationship. Historical relationships signal the likeness of direction, whereas, price patterns point to quantity of decrease and increase. "Market factors (Interest rate changes, economic conditions, political factors, announced pending acquisitions.), are already incorporated into current market price per share. If demand exceeds supply, the stock price will increase, and vice versa." (International Encyclopedia Page 16 and 17, J. Siegel, J. Shim, A Qureshi, J Brauchler) Charts are technical, and fundamentals play little or no roll when the technician makes decisions to buy or sell. He's only interested in charts - usually 50 or 200 day moving average charts, volume, and the accumulation or distribution of a stock. WHAT ARE OPTIONS Options have basic uses. O ne, to hedge-using options to safeguard against the underlying stock reducing in value. Much the same way as an insurance policy pays upon death, a put option pays (Or goes up in value.) as the underlying stock goes down.