THE 10 RULES FOR THE TRADER

  BR0CHURE NEW

The market of the covered warrant, as every other market of instruments derives to you, is not simple in the operation and luminosity in the mechanisms that govern it. The reasons are essentially two: to specific nature of the cw, whose price only marginally depends on the dynamic normal schools of supply and demand and the role of the issuing ones in the development of the market function makers. The market is based on the principle on the base of which the issuing one, than assumes the burden to constitute and to make to work the market, of it establishes the rules of operation and the modalities of determination of the prices, in the respect of the principles of corrected development of the exchanges and the rules of calculation of the theoretical price. It is introduced, therefore the necessity to characterize the elements that an investor must hold in consideration, affinchè can limit the rischiosità of the Mcw and affinchè it can be entrusted to criteria of rationality for the choice of the cw just.

1) total Analysis of the reference market. He turns out fundamental to analyze the conjunctural situation of the economic scene. If the reference market introduces a marked one trend to rise, then an eventual bet on the single one tito it or comparto of such market will have, necessarily, to be filtered on the base of a positive interpretation. To the contrary, in the within of a scene of persistent diffidenza and pessimism, the investment, also on the society that introduces the best perspectives than increase, it will have to hold account of contingent limits to the evolutionary potentialities of the title it.

2) the timing. It represents a decisive element and it is therefore necessary to hold account that, for how much very set up, difficultly a title it will be able prodursi in a consisting rise, if the continuous market of reference to propose a succession of sitting univocamente oriented to the decrease.

3) the below. The choice of the below must be based on one study of the fundamental ones and the technical analysis. At the moment the below ones more exchange to you and " more reliable " in this period of uncertainty they are the Italian share indices and foreign it is for the greater volumes of exchange is for minor the propensione to the typical specific risk of the single ones tito them.

4) the factor time. It influences directly on the value of the derived one that,   just because of the time, is characterized from trend of the decreasing price and a that independently from the other variable ones that of it influence the value. Therefore the cw it must be used for every day speculations, to the maximum overnight. Moreover the effect time is as well as greater how much the more is approached to us upon maturity and as well as greater a how much the more cw it is out-of-the-money,   why the probalilità that the covered expires " in " loses weight remarkablly. A rule empiricist to remember is that cw a last week of life introduces an equal value to a third party of the value begins them.

5) Moneyness. If an investor introduces an elevated profile risk-rendering, the choice of the cw will have to fall back on a cw out-of-the-money or at-the-money, why mainly sensitive to variable that influences a cw. Otherwise the choice it will fall back on a covered in-the-money that greater stability in the evolution of price guarantees one. Sconsigliabile E' the choice of cw deep-in-the-money (share investment comparable to that) and deep-out-of-the-money (excessive sensitive to the factor time and the volatilità). In this period, for all the investor, the choice must fall back for cw in-the-money or to the maximum at-the-money, from the moment that the instability of the markets exposes the investor to ingestibili risks.

6) Spread bid-ask. The choice will have to fall back on those cw that they introduce differentiates them not advanced to the 5-5,5% and above all will have to be estimated politics of the Maker Market as far as the increase of such differentiates them in critical moments us of the market.

7) implicit Volatilità. All the investor will have to head at covered that they introduce historical next   an implicit volatilità to that (if not quite inferior one), why is guarantee of a $R-a.buon.mercato purchase of the covered. Like for the spread bid-ask, also for the volatilità it is necessary to estimate the behavior of the MILIMETER in terms of cuts of volatilità and therefore of unexpected losses of value of the derived one.

8) Liquidity. A cw liquid it is sure from preferring to an unliquidated one, why they increase the possibilities to monetizzare the investment to the price and for the amounts wished, in timely way, even if such characteristic must be accompanied from a spread and a volatilità adapts to you. Moreover it is fundamental that cw present a advanced delta to 50%, therefore to take advantage of the effect lever, that characterizes the instruments derives to you.

9) The Maker Market. In relation to the political of management of the bid-ask, of the implicit volatilità and the liquidity, it becomes important to characterize the coherence and the reliability of the MILIMETER, inasmuch as these last ones can modify arbitrarily such variable. Through a qualitative selection of the issuing ones from part of the investor the attainment of that transparency and that efficiency is only thinkable, which often reference is made when it is spoken about cw.

10) the psycology of the investor. One of the rules more difficult application is that one to preview the closing in loss of one position. The psycology of the traditional investor excludes, in fact, this solution: the more common strategy is that one than to wait for finchè the price laughed them, at least until the purchase value it begins them. A covered one moves on a trend of absolutely decreasing bottom and therefore he would be counter-productive to stop the title it in pocketbook. For or same reason he is absolutely sconsigliabile to adopt, in loss case, the strategy to mediate to the decrease. A cw it has always greater probabilities of loss that of gain, poichè in a theoretically immovable market, a covered loses value for the simple one to pass of the time. Iron rule, therefore, will have to be that one to fix stop-loss.

Edited by      Riccardo Catalani

     HOME              BR0CHURE NEW

This situated one must be meant like information source and cannot, in no case, considered being an offer or one sollicitation to the purchase or the sale of issues. The contained information in this study are fruit of news and opinions that can anytime be modified without warning.