Options Enhance Trading and Investment Portfolios
Myron Scholes, Robert Merton, and the late Fischer Black revolutionized the financial markets and won a Nobel prize in economics in 1997 with their formula for the valuation of stock options. In 1973, they published the Black-Scholes formula traders and investors worldwide use to value stock options. The trio’s contribution showed that a risk premium is unnecessary when valuing an option as it is already included in the underlying price.
A put option provides the buyer with the right, but not the obligation, to sell an asset at a price (the strike price) for a limited time (until the expiration date). A call option gives the buyer the right, but not the obligation, to buy an asset at a strike price until the expiration date. Option buyers pay a price (the premium), while sellers receive the premium. Call and put options are price insurance, with buyers acting as the insured and sellers as insurance companies.
Options are tools that investors, traders, and speculators employ to gain leverage and hedge individual risk positions and portfolios. Option sellers can receive income as they collect premiums. The beauty of put and call options is they provide market participants with many alternatives that can increase or decrease risk, making them indispensable tools.
Many market platforms provide option pricing and services, but Tradier’s TradeHawk platform is the one that would make Merton, Scholes, and Black proud. While the trio wrote the formula, TradeHawk offers the tools creating opportunities to use options for a wide range of market participants, from novices to experts.
Towers simplify options
- TradeHawk’s towers are real-time option prices that display a range of statistical metrics.
- The towers improve decision-making by condensing all the information in one comparative display.
- Time is of the essence as prices are constantly changing- Towers can aid in capturing opportunities.
- TradeHawk tracks profit and loss dynamics on all risk positions, including stocks and options.
- Real-time P&L metrics allow for an iterative approach to risk management.
- Risk management is critical for success in markets.
What-if this and What-if that?
- Planning is crucial in markets as it is the first step in establishing risk-reward parameters.
- TradeHawk has “what-if” capabilities that will measure potential risks based on various changes in asset prices and market dynamics.
- “What-if” metrics are tools that can enhance and mitigate risks when planning for a trade or investment. “What-if” scenarios can become orders with a click of a mouse.
Keeping track of a growing portfolio
- TradeHawk provides individual strategy dynamics.
- Individual strategies can become part of a multi-portfolio approach as a portfolio grows.
- TradeHawk allows for flexibility in sorting and customizing risk positions.
Charts are a roadmap
- Charts provide inventors and traders with price history.
- History often repeats, and trends tend to continue, making charts valuable tools.
- TradeHawk delivers the ability to design customized charts for stock and option risk positions.
Pricing is critical
- Commissions are crucial factors as they subtract from profits and add to losses.
- Tradier offers $10 per month commissions for unlimited stock and options trading with full access to the TradeHawk platform.
- Active traders know that commissions can add up to $100s or $1000s in monthly costs. Tradier caps these expenses while offering a flexible, reliable, and revolutionary trading platform, TradeHawk.
Thanks for reading, and stay tuned for the next edition of the Tradier Rundown!
Options carry a high level of risk and are not suitable for all investors. Please read the Characteristics and Risks of Standardized Options before trading in options.
* Single Listed Index Options are subject to a $0.35/contract commission in addition to any other charges for exchange, OCC and regulatory fees. See Fee Schedule for more details.
Tradier Brokerage Inc. charges for exchange, OCC and regulatory fees. Other fees and applicable minimums may apply seeFee Schedule for more details.
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