Learn to be your investment manager

Manage your money with your self-directed Investments where knowledge of Options plays a key role

In recent years many investors exited the stock market because they lost control of their investments because they relied on the advice and skill of their mutual funds, wealth managers, brokers, bankers, and financial planners. Many investment and retirement accounts have dwindled or not increased. Many retirees are forced to work again. Fortunately, there is a great but little-understood alternative: the self-directed Investments.

A book is available that will teach you how to turn your Investments into a wealth-building tool under your full control - you are not at the mercy of unknown or known money managers!

Take control of your investment future, and make sure your investments are performing for YOU, not someone else.

Why do your banker, mutual fund agent and broker constantly reminds you that you are not capable of managing your own Investments? Because they will no longer make any money by managing your funds! If you understand the simple principles, it is effortless to build up and keep hold of Investments. Warren Buffet has said about the importance of simplicity in investment decisions. Inside this new book, you’ll find out how to benefit from the eternal investment rules and how to stay away from problems.

The book will help you to take decisions on real estate , buy a business / franchise, invest in commodities, invest in foreclosed homes, manage property purchased by your investment/ retirement funds, rental property, lake-front property, commercial property, industrial property, apartment communities, etc. It also covers stocks, bonds, mutual funds, and options.

The self-directed Investments makes you act as your own investment manager. The book will show you how to set up your account with a custodian (if needed) to deal with the day-to-day activities, such as depositing contributions and executing and settling investment transactions. This is easy, fun, and puts you back in control of your investments and hard earned money. The book combines essentials, insight, and insider secrets to secure a financial victory!

OPTIONS LESSON: How to choose Option Spread Trades?


Choosing the right options spread is important to earn profits.


A trader can initiate a neutral long strangle if he/she anticipate implied volatility will rise (without being bullish or bearish).


Likewise, traders can establish a neutral short strangle if they expect implied volatility will drop (without being bullish or bearish). Or, they may prefer to establish a near-to-the-money iron condor.


It is important that each trader choose the strategy that matches his/ her volatility outlook. Also they must ensure that the strategy is suitable for his/her risk tolerance and account size.


STRATEGY SUMMARIES


Each strategy is summarised below:


• Long strangle

–      Out-of-the-money (OTM) long call

-       OTM long put

-       Greek values = positive gamma, negative theta and positive Vega

• Short strangle

–      Out-of-the-money (OTM) short call

–      OTM short put

– Greek values =negative gamma, positive theta and negative Vega

• Strangle swap

–      Short strangle

–      Near -to-the-money long strangle in a deferred month

– Greek values =positive gamma, negative theta and positive Vega

• Iron condor

–      Near -to-the-money credit call spread

–      Near -to-the-money credit put spread

– Greek values =negative gamma, positive theta and negative Vega

What is the meaning of the GREEKS values?


• Positive gamma = position benefits from market movement (it gets delta long on rallies and delta short on declines)


• Negative gamma = position gets delta short on rallies and gets delta long on declines


• Positive theta = money earned per day from positive time decay


• Negative theta = money lost per day from negative time decay


• Positive Vega = money earned if implied volatility rises 1%


• Negative Vega = money lost if implied volatility drops 1%

OPTION LESSON: Options Spread on NIFTY


Assume you open the following NIFTY position in June 2012:


• Long 100 Jul 4800 put


• Short 200 Jul 4700 puts


And


• Long 1 Aug 4500 put


You could describe this position as a Jul 4800 / 4700 put ratio spread along with a long Aug 4500 Put.


Or you could describe it as a Jul 4800 / 4700 debit (bear) put spread along with a Jul / Aug 4500 diagonal calendar put spread.


You can understand the dynamics better if Greeks are calculated –  In other words, the position is defined by its delta, gamma, theta and vega figures.


Here are its Greeks and required margin as of the close of business 18 June 2012

The position has a vega of 140%.

These Greek variables are important, since they describe how the position will respond to market movement (delta and gamma), to the passage of time (theta), and to changes in implied volatility (vega). They also help us to know how to adjust positions.