It is a temporary rally in the price of a security or an index after a major correction or downward trend. The Iron Butterfly Option strategy, also called Ironfly, is a combination of four different kinds of option contracts, which together make one bull Call spread and bear Put spread. Together these spreads make a range to earn some profit with limited loss. Hedge fund is a private investment partnership and funds pool that uses varied and complex proprietary strategies and invests or trades in complex products, including listed and unlisted derivatives.
Put simply, a hedge fund is a pool of money that takes both short and long positions, buys and sells equities, initiates arbitrage, and trades bonds, currencies, convertible securities, commodities. The loan can then be used for making purchases like real estate or personal items like cars. The only thing that this loan cannot be used for is making further security purchases or using the same for depositing of margin.
Description: In order to raise cash. Lot size refers to the quantity of an item ordered for delivery on a specific date or manufactured in a single production run. In other words, lot size basically refers to the total quantity of a product ordered for manufacturing.
A simple example of lot size. Choose your reason below and click on the Report button. This will alert our moderators to take action. Nifty 18, Zomato Ltd. Market Watch. ET NOW. Brand Solutions. Video series featuring innovators. ET Financial Inclusion Summit. Malaria Mukt Bharat. Select personalised content. Create a personalised content profile.
Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. Volume and open interest are two key technical metrics that describe the liquidity and activity of options and futures contracts.
Here, we examine these two metrics and offer tips for how you can use them to understand trading activity in the derivatives markets.
The volume metric tabulates the number of options or futures contracts being exchanged between buyers and sellers in a given trading day; it also identifies the level of activity for a particular contract. Each transaction—regardless of whether it's an opening or closing transaction—counts toward the daily volume. The greater the volume, the more interest there is in the security. Investors sometimes view volume as an indicator of the strength of a particular price movement.
More volume also means that there is greater liquidity in the contract; this is desirable from a short-term trading perspective, as it means that there is an abundance of buyers and sellers in the market. Therefore, the trading volume is 0. In the next session, an investor buys 15 call option contracts, and there are no other trades that day, the volume is now 15 contracts. Open interest is the number of options or futures contracts that are held by traders and investors in active positions.
These positions have been opened, but have not been closed out, expired, or exercised. Open interest decreases when buyers or holders and sellers or writers of contracts close out more positions than were opened that day. That's probably why many options traders ignore open interest altogether. However, you shouldn't assume that there's no important information there.
One way to use open interest is to look at it relative to the volume of contracts traded. When the volume exceeds the existing open interest on a given day, it suggests that trading in that option was exceptionally high that day. Open interest also gives you key information regarding the liquidity of an option. If there is no open interest in an option, there is no secondary market for that option. When options have a significant open interest, it means there are a large number of buyers and sellers out there.
An active secondary market increases the odds of getting option orders filled at good prices. All other things being equal, the bigger the open interest, the easier it will be to trade that option at a reasonable spread between the bid and ask.
For example, suppose you look at options on Apple Inc. This suggests that the market in Apple options is active and there may be a lot of investors in the marketplace who want to trade. Therefore, it is likely you can buy one call option contract at the mid-market price.
On the other hand, suppose the open interest is 1. This indicates there is very little open interest in those call options and there is no secondary market because there are very few interested buyers and sellers.
It would be difficult to enter and exit those options at good prices. Trading does not occur in a vacuum. Indicators that show you what other market participants are doing can inform your trading system. Daily trading volume and open interest can be used to identify trading opportunities you might otherwise overlook. These indicators are also useful for making sure the options you trade are liquid, allowing you to easily enter and exit a trade at the best possible price.
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