Dr The Singh Posted 18 October 2006 Posted 18 October 2006 Guys, I spoke to my cousin the other day, after about 5 years and he's big inot OPtions Trading and has been quite successful. He said maybe I should get into it as I have alot of time during the day at work!! He mentioned a guy called Chuck Mellon and went on some wealth mastery courses or something, and from what he told me it is a very comprehensive thing, and will take along time to get into!! I was wondering if any of you guys have some insight or advice for someone like me who's thinking about it??????
Monk Posted 18 October 2006 Posted 18 October 2006 Options trading in equities is known as equity derivatives. It basically involved writing contracts with other banks/large institutions to have the option to purchase/sell a share at a certain price at some point in the future. So, for example, you think that Vodafone shares will fall in price, but everyone else thinks they will rise. You buy an option to BUY the shares in, eg 6 months time, at an agreed price, higher than what you believe it will fall too. Then if it turns out that the price did OK after all and excercising your right to buy would cause you a loss, then there is no obligation to excercise the option. Try reading up on Wikipedia. Unless you have a very strong economics background you would really struggle to break into this as a career. Any questions gizza shout, I work in Investment banking so might be able to give you some pointers.
Monk Posted 18 October 2006 Posted 18 October 2006 But I take it you mean doing it as a personal investment strategy? I'd reccomend you try regular share investments for a while first. You need to be able to spot market behaviour patterns and be constantly up to date with news on your investments. I'd say you need to get reading - get a few decent books published by the Financial Times. Set up some fantasy shares and see how you get on.
breaker7 Posted 18 October 2006 Posted 18 October 2006 Am an options trader myself but not ballsy enough to do it with my own money - they're not called "instruments of mass destruction" for no reason ! Try spreadbetting first - much cheaper and easier to understand !
Monk Posted 18 October 2006 Posted 18 October 2006 Whats a trader doing on FT during trading hours? I smell a rat, or a lazy trader! Chopped!
Dr The Singh Posted 18 October 2006 Author Posted 18 October 2006 But I take it you mean doing it as a personal investment strategy? I'd reccomend you try regular share investments for a while first. You need to be able to spot market behaviour patterns and be constantly up to date with news on your investments. I'd say you need to get reading - get a few decent books published by the Financial Times. Set up some fantasy shares and see how you get on. Thank for the info Monk, i'm not thinking of it as a career, i'm just interested that's all.....like I say my cousins done very well, considering he was a typical bum student one day and now a fairly rich smug ****!!! I wouldn't mind getting into trading, are there any recommended books you would recommend????
Monk Posted 18 October 2006 Posted 18 October 2006 I don't know what your level of knowledge on investment is. You could try the following: "The Motley Fool UK Investment Guide" - Amazon - £8.57 - Bloody brilliant book on personal finance & investments. Everyone should have it. "The Financial Times Guide to Investing" - Amazon - £13.79 - FT Books are not exciting but they are factual and reliable. There are millions of books available, but as a starter I'd reccomend you understand the basics rather than trying some guys miracle strategy. If people are that good at investing they make enough money to not have to write books like that! Other than that I reccomend you go to Yahoo Finance (www.yahoo.co.uk/finance) - set up an imaginary portfolio - a simple one. Base it only on FTSE 100 or FTSE 250. If you look up individual shares you can see more detail on them - news articles, broker reccomendations and in the Detailed section there is a graph of the security's cycle. Obviously you want to buy low sell high. Then you have to take into account trading costs - which are around £10 per share. So you need to be investing a large enough sum of money and anticipating gains in excess of this. Halifax sharebuilder does trades on certain dates during the month and this brings the price down to a few quid. Worth a gander.
breaker7 Posted 18 October 2006 Posted 18 October 2006 Whats a trader doing on FT during trading hours? I smell a rat, or a lazy trader! Chopped! Ha - lazy trader my a**. Just keeping up to date on the mighty Leicester's efforts last night, and happened to see something about options trading - which was a little unexpected !
cisono Posted 18 October 2006 Posted 18 October 2006 Options trading in equities is known as equity derivatives. It basically involved writing contracts with other banks/large institutions to have the option to purchase/sell a share at a certain price at some point in the future. So, for example, you think that Vodafone shares will fall in price, but everyone else thinks they will rise. You buy an option to BUY the shares in, eg 6 months time, at an agreed price, higher than what you believe it will fall too. Then if it turns out that the price did OK after all and excercising your right to buy would cause you a loss, then there is no obligation to excercise the option. Try reading up on Wikipedia. Unless you have a very strong economics background you would really struggle to break into this as a career. Any questions gizza shout, I work in Investment banking so might be able to give you some pointers. How does this relate to the futures market? [Makes me think of the movie "Trading Places".]
Monk Posted 18 October 2006 Posted 18 October 2006 How does this relate to the futures market? [Makes me think of the movie "Trading Places".] Look it up on Wikipedia! Futures / Forwards / options / Swaptions - all derivatives have similarities but are fundamentally different.
Monk Posted 18 October 2006 Posted 18 October 2006 Ha - lazy trader my a**. Just keeping up to date on the mighty Leicester's efforts last night, and happened to see something about options trading - which was a little unexpected ! Where do you work?
cisono Posted 18 October 2006 Posted 18 October 2006 Look it up on Wikipedia! Futures / Forwards / options / Swaptions - all derivatives have similarities but are fundamentally different. Hmm I need a diagram to make sense of how these things relate to each other...
Dr The Singh Posted 18 October 2006 Author Posted 18 October 2006 How does this relate to the futures market? [Makes me think of the movie "Trading Places".] Yes i have fond memories of Jamie Lee Curtis, in this film, also the fabulous house party!!!
Monk Posted 18 October 2006 Posted 18 October 2006 I would love to, but my lunch isnt going to make its own way from the shop to my desk, so itll have to wait!
Dr The Singh Posted 18 October 2006 Author Posted 18 October 2006 I don't know what your level of knowledge on investment is. You could try the following: "The Motley Fool UK Investment Guide" - Amazon - £8.57 - Bloody brilliant book on personal finance & investments. Everyone should have it. "The Financial Times Guide to Investing" - Amazon - £13.79 - FT Books are not exciting but they are factual and reliable. There are millions of books available, but as a starter I'd reccomend you understand the basics rather than trying some guys miracle strategy. If people are that good at investing they make enough money to not have to write books like that! Other than that I reccomend you go to Yahoo Finance (www.yahoo.co.uk/finance) - set up an imaginary portfolio - a simple one. Base it only on FTSE 100 or FTSE 250. If you look up individual shares you can see more detail on them - news articles, broker reccomendations and in the Detailed section there is a graph of the security's cycle. Obviously you want to buy low sell high. Then you have to take into account trading costs - which are around £10 per share. So you need to be investing a large enough sum of money and anticipating gains in excess of this. Halifax sharebuilder does trades on certain dates during the month and this brings the price down to a few quid. Worth a gander. Thanks for the great info Monk, much appreciated, I have ordered some cheap reading material to first grasp what this trading malarky is all about and will take it from there!!!
cisono Posted 18 October 2006 Posted 18 October 2006 Yes i have fond memories of Jamie Lee Curtis, in this film, also the fabulous house party!!! Haha yes, I know the one you mean (house party) Let me guess... not the scene when she (unexpectedly) gets undressed in front of the mirror perhaps?
breaker7 Posted 18 October 2006 Posted 18 October 2006 Where do you work? In a small trading house in the City. Not a big bank or anything like that
Monk Posted 18 October 2006 Posted 18 October 2006 Nice, I work at RBS on bishopsgate in Fixed Income. How long have you been trading? Enjoy it? I have considered trying to get to Front Office but not sure if its worthwhile!
breaker7 Posted 18 October 2006 Posted 18 October 2006 Nice, I work at RBS on bishopsgate in Fixed Income. How long have you been trading? Enjoy it? I have considered trying to get to Front Office but not sure if its worthwhile! Just round the corner then ! I have been trading here for about 2 years - been in the industry for 5. I do enjoy it - despite its many ups and downs. If its what you want to do then I'd definitely go for it - but it is hard work which is good for me as its what I have always wanted to do - but for those in it just for the rewards, it isn't easy !
Dr The Singh Posted 18 October 2006 Author Posted 18 October 2006 Just round the corner then ! I have been trading here for about 2 years - been in the industry for 5. I do enjoy it - despite its many ups and downs. If its what you want to do then I'd definitely go for it - but it is hard work which is good for me as its what I have always wanted to do - but for those in it just for the rewards, it isn't easy ! Breaker7 mate, can you provide any insight or major pitfalls or trade secrets???
Monk Posted 18 October 2006 Posted 18 October 2006 Breaker7 mate, can you provide any insight or major pitfalls or trade secrets??? Namely diversification (lack of) exposes you to large changes in value of constituents of your portfolio. And the bandwagon effect - ie even if everyone knows they are in a bubble they will stay in it for too long. There is the obvious - ie dont invest in a share AFTER good news comes out - if you do that you are already too late. The best time to invest is when some bad news knocks the share price but it will recover within days or weeks, or those which are in high growth areas, like Google.
Dr The Singh Posted 18 October 2006 Author Posted 18 October 2006 Namely diversification (lack of) exposes you to large changes in value of constituents of your portfolio. And the bandwagon effect - ie even if everyone knows they are in a bubble they will stay in it for too long. There is the obvious - ie dont invest in a share AFTER good news comes out - if you do that you are already too late. The best time to invest is when some bad news knocks the share price but it will recover within days or weeks, or those which are in high growth areas, like Google. Thanks again Monk, and I had to ask, are you a real Monk, cus I hear they brew some good beer!!!!
Monk Posted 18 October 2006 Posted 18 October 2006 I was once a data monkey - hence the nickname. Though now it has grown into the simple 'monk'. I'm now a supervisor so it no longer applies per se but keep the name. Now its 'monk' as in 'beating the monkey drum' bum-bom-bum-bom-bum-bom. Type to the drum.
Dr The Singh Posted 18 October 2006 Author Posted 18 October 2006 I was once a data monkey - hence the nickname. Though now it has grown into the simple 'monk'. I'm now a supervisor so it no longer applies per se but keep the name. Now its 'monk' as in 'beating the monkey drum' bum-bom-bum-bom-bum-bom. Type to the drum. Shame, I was hoping you brew beer!!!!!
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