By Diego Rebissoni
This article is intended for investors who have expertise on financial options and looking flange tips for taking your first steps to invest in the local market options. Remember that financing options are instruments of risk and therefore their premiums (contributions) are subject to significant price changes and that changes will be reflected in investor wealth. Listed below are 5 tips for taking the first steps in the complex world of financial options and remember that the more knowledge about this transaction better your approach to the fascinating world of financial derivatives.
1 - Liquidity Constraints and selection of actions
In our market, trading volumes on options we are very large and liquidity tends to focus on options for maturities in the next couple months and shares of Tenaris and Grupo Financiero Galicia. Also, at certain times find acceptable liquidity in Pampa Energy and the Banco Patagonia CEDEARs of Citigroup. Remember that liquidity is synonymous with many investors buying and selling, and this will allow you to buy and sell their premium with relative ease and at the time you want.
2 - Time to exercise
Initially s is recommended to start operating with 60 days to maturity and not extend element the operative beyond 30 days before the date of exercise. The reason why there is a restriction comeinzo (60 days before) is due to liquidity constraints (there are plenty of operations). The second constraint, try not to operate is missing 30 days or less, mainly due to advanced concepts, but we operate between 60 and 30 days is to have good liquidity and the impact of the passage of time is not as relevant as it is in the last 30 days.
3 - At selected its underlying asset or action, starting with the "At the money"
is well known, but most of the wheels on options transactions are concentrated in the price exercise or strikes closer to the stock price (known as ATM). In addition to generally have a good volume leverage means, especially for a reasonable start. To explain this simply, when the stock rises, the options (ATM) is not that but you pick up or lower. Among the various possible strikes has a medium risk, but always talking about very significant changes.
4 - Study the selected square
After selecting your choice, do not throw an order at market price, carefully study the operations being carried out (prices, quantities) and never lose sight of the share price. If the purchase and sale are near and gives a good volume of business at a certain price, look towards that value to buy. Do not operate or points spread far apart, that is if they buy at 0.05 and sold at 0.10, 0.10 and pay not wait to come and watch you give value operations.
5 - Involve small amounts:
Always keep in mind that these instruments are very risky and multiply the price changes of action. Many times you will find variations of 2% on the price of the shares and option premiums, which vary in the order of 20%. Therefore involving $ 10,000 in shares lost $ 200 while the same action options can lose $ 2000.
The author is the creator of www.leiod.com.ar, a site to enhance options trading in the stock field Buenos Aires.
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