Research (Proinvestory.cz)
Commodities  |  March 27, 2013 12:46:29

Cyprus crisis from the perspective of a trader


Cyprus crisis dominated media headlines. More experienced investors and traders instead of debates about options for resolving seek ways to make the current situation. It's just so, crises and disasters in financial markets can be great opportunities to profit. I was asked to show how I use this situation to trading the. Let's take a look at how the crisis in the financial markets can bring a good return without undue risk.

I like simple and time saving option strategies. Performing listings options, or for entry into the market collects money (option premium). If the market does not attack hits my option, then I make the maximum profit. And what is the advantage of the options? When the market goes against my strategy, I can choose a number of maneuvers, which I avoid loss. I do not know any other tool that would give me similar benefits.

But let's get to practice. Cyprus crisis raises concerns in financial markets. Growing volatility, and therefore increase the premium. Fears in the market means very decent premium for listing options. The first question you ask is this: Is the Cyprus crisis big problem? Guideline is my VIX index, which in layman's terms shows level of fear in the markets. Who stares attentively at VIX, noting that we were last year witnessed events that appear to VIXu much more effectively. Cyprus crisis has so far failed VIXu such values, which reached problematic auctions of Spanish and Italian bonds in the summer of last year, the unexpected victory of Barack Obama in the presidential election, fear of fiscall clif or concerns after Italian parliamentary elections.

Currently all financial markets still sees the Cyprus crisis as manageable, VIX is at extreme values. At the moment this is not the armageddon. Of course I do not have a crystal ball and I do not know what the situation will look like in a few hours, days or weeks. Currently but not the end of the world, at least according VIXu.

Additional attention include economic news. Macros for the last four months are generally good, or anyone excite high unemployment in Europe (still talking about the view of financial markets, not the media or the public!). There is no reason for the deterioration of the Cyprus crisis of the real economy.

At that moment I look after the amount of the premiums for the put options on the index ETF. Dumping put option and collect a decent premium. Listings prefer doing the supports, which sent markets previous "critical" event (Obama, fiscall clif, Italian elections ...), or around them. Part of closing positions at a profit 50% of the premium, the rest leave to expiration.

Important of course, is no longer an option when listing to know what I'll do when the markets will fall and my listings are in danger. This is a crucial thing to have every investor or trader previously answered. My principle is that not my listings hit the market. Endangered option and redeem statement is further away from the market in another kontraktním week or month - will use the fact that the time options are far more expensive insight to higher time value.

And that's it. Nothing complicated, is not it? Who cares more detailed insight into the situation presented, can be read in the comments that I write and Associates   dedicated as gold or  presidential election in the United States .

Crises and disasters in financial markets provide the best profitable situation. Of course, with a clear plan of what to do when the market goes against me. I love the experience, not theorizing - which I try to instill the clients. I trade options on own account for many years, I have an annual yield of over 22%, maximum 38% per year.That's what he does business, I teach it to my clients in trading consultations. From their feedback I know them my practices, and access to markets works.

I was asked to contribute to this sever their experience of their own business practices. So please, as well as any comments that were the case. In the financial markets, we have so that we earn, not to lead endless discussions.

Martin Kopáček

Tyto zprávy pro vás vytváří server Proinvestory.cz ve spolupráci se serverem SILVERUM .
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