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Pricing Options In The Real-World Measure

Posted on December 20, 2022 By 
Option pricing is usually carried out in the risk-neutral world where the market participants are assumed to be indifferent between taking a certain payoff or investing in an asset with that same expected return. Mathematically, an option’s price is the expected value of its payoff in the risk-neutral measure discounted …
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Trading Butterfly Option Positions: a Long/Short Approach

Posted on December 17, 2022 By 
A butterfly option position is an advanced trading strategy that requires a combination of calls and/or puts with three different strike prices of the same maturity. It’s a non-directional options trading strategy that is commonly used when an investor believes that the underlying asset’s price will remain relatively stable in …
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How Accurate are Technical Indicators?

Posted on December 8, 2022 By 
A technical trading system is a set of rules that define how to enter, exit, and manage trades in the financial markets. It is based on technical analysis which seeks to identify trends and patterns by analyzing past price movements. It includes precise criteria for when to buy or sell …
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What is a Robust Trading System?

Posted on December 5, 2022 By 
A trading system is a set of rules that define when to buy or sell a security. The purpose of a trading system is to take the emotion out of trading and help the trader make objective decisions. There are many different types of trading systems, but all systems have …
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Volatility Timing: Does It Work?

Posted on December 2, 2022 By 
Volatility of an asset is the measure of how much its price changes over time. The higher the volatility, the greater the price swings. There are two types of volatility: historical and implied. Historical volatility is a measure of how much an asset’s price has fluctuated in the past. Implied …
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Is It Worth Reading Financial News?

Posted on November 29, 2022 By 
A recession is a significant decline in economic activity spread across the economy, lasting more than a few months. It is visible in industrial production, employment, real income, and other measures of economic activity. A recession generally occurs when there is a widespread drop in spending (an adverse demand shock). …
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Has Technical Analysis Become More Popular Than Ever?

Posted on November 26, 2022 By 
Technical analysis is a technique that attempts to forecast future price movements by analyzing past price data and market trends. Technical analysts believe that all relevant information about a security is reflected in its price, and therefore believe that studying price changes can provide valuable insights into where the security …
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