dr. scott brown stock options. options symbol an option symbol is a code by which options are...

Dr. Scott Brown Stock Options

Options Symbol An option symbol is a code by which options are identified on a futures exchange. Ex. XDLQ2 Although the letters may appear random, there is actually an organized structure to each symbol. It is a backup to ensure you enter the correct option order. This is one of the three most common mistakes for both retailers and brokers. Incorrect symbol, Wrong quantity, Wrong Action

Incorrect Symbols Are Costly You have to pay an extra commission to correct it (remove and replace) You can incur a Loss You may miss out favorable movements

Symbol Structure XXXMS XXX the root symbol M Month S Strike Price

The Root symbol Is a code that identifies the underlying code and can be any length form one to three letters. Stocks listed on an exchange will have the same root symbol as the ticker symbol, although it may be different from splits, mergers, acquisitions and special dividends. Ex. IBM, GE For the NASDAQ trade stocks (with 4 letters ticker) will be reduced to three letters, including an ending Q to designate NASDAQ. Ex. Dell DLQ MSFT MSQ

The Month Symbol The month symbol depends on the type of the option, a call or put. For call options: the first twelve letters of the alphabet represent the 12 months For puts: Letters M to X (letters 14 to 23 of the alphabet) are use to represents the months. JanFebMarAprMayJunJulAugSeptOctNovDec Call s ABCDEFGHIJKL PutsMNOPQRSTUVWX

Options Strike Price Symbol Each letter from A to T represents $5 strike intervals. Because there is a wide range of potential strike prices and a limited number of letters, each letter represents more than one strike price. Once $100 is reached (letter T) a new root symbol is created and we are required to start back at A. In addition letters U trough Z are reserved for $2.50 strike intervals.

Options Strike Price Symbol

Other Considerations If any option you are holding goes through a symbol change, it will automatically change in your account. You must always check the symbol before trading, nothing ensures that the root will remains the same. There are companies that use different roots based on the range in which is the strike price The MS of the symbol tells three important things: The month, the strike price and the option type

Option Expiration Cycles Because option strategies require making modifications during the life of a trade, you need to know in what months the options will expire. Originally all options stocks were randomly assigned to one of three cycles: 1 st Cycle: January; 2 nd Cycle: February and 3 rd Cycle March Once a stock is assigned to a particular cycle, it does not change.

The Cycles Options under Cycle 1 would have expirations matching the first month of each quarter. The Cycle 2 Stocks only have options expiration to the middle month of each quarter. And the Cycle 3 have expiration for the end month of each quarter. JanFebMarAprMayJunJulAugSep t OctNovDec

New Rules To ensure that there would always be short-term options, the CEOB decide to change the rules. Under the new rules, there would still be four option expiration months listed: The first two months of the quarter are always the two near months (the current and the following month, also called the serial months), but for the two farther-out months, the rules use the original cycles.

Lets see how it works Let's say it is the beginning of January, and we are looking at a stock assigned to the January cycle. Under the newer rules, there is always the current month plus the following month available, so January and February will be available. Because four months must trade, the next two months from the original cycle would be April and July. So, the stock will have options available in January, February, April and July. JanFebMarAprMayJunJulAugSep t OctNovDec

February is already trading, so that simply becomes the near-month contract. Because the first two months must trade options, March will begin to trade on the first trading day after the January expiration date. So the four months now available are February, March, April and July. Lets see how it works (Cont.) What happens when January expires? JanFebMarAprMayJunJulAugSep t OctNovDec

Lets see how it works (Cont.) What happens when February expires? Once the February options expire, March becomes the current contract. The following month, April, is already trading. But with March, April and July contracts trading, that's only three expiration months, and we need four. So, we go back to the original cycle and add October because it is the next month in the January cycle after July. So the March, April, July and October options will now be available. JanFebMarAprMayJunJulAugSep t OctNovDec

Some Highlights This pattern continues regardless of which cycle were on. The serial months (current and following) must always be made available. No matter the cycle of stock, it will have the serial months available. The remaining two months will be from the corresponding quarterly cycle.

LEAPS LEAPS are long-term options When options first started trading, there were available up to nine months, but with LEAPS we can find options nearly three years forward. There will be more than four contracts listed at any given time. LEAPS usually trade with a January expiration date. If a stock does have LEAPS, then new LEAPS are issued in May, June or July depending on the cycle to which the stock is assigned. The premiums for LEAPs are higher than for standard options in the same stock because the increased expiration date gives the underlying asset more time to make a substantial move and for the investor to make a healthy profit.

How do Options Cycle works with the addition of LEAPS? If a stock trades LEAPS, the new LEAPS will be issued sometime between May and July. Lets explain it with an example Its currently July 05 and Intel has the following months trading: July, August, October, January06, January07, and January08 At this point Jan07 and Jan08 are LEAPS contracts. The Jan06 are considered a quarterly contract. When July expires, September will be added We will then have August, September, October, and January06 providing four months of regular contracts. When August expires,, we will have only three months providing regular contracts, therefore the next January Cycle month will be added, which is April.

How do Options Cycle works with the addition of LEAPS? (Cont.) This process continues and eventually the date become May06. The January06 options will have been expired, and are no longer listed. When May options expire, there will be only three contracts months (June, July, and October). This is where we have to add another January contract since it is the next January cycle month. It is at this point where the January09 contract will be rolled out. At the same time the January07 contract will lose their LEAPS designation because they have les than nine months to expiration. The root symbol to show that it is no longer a LEAPS option, this will happens in May, June or July. This process is called melding (when LEAPS options become regular options).

Which Cycle is My Stock On? Before you can find out when a particular month will be added to the list you will need to: Know in which cycle your stock is trade How? If we have the months that the option has being traded, we know that the first two months are the serial months, so we must look at the third or fourth month (when the 3 rd month is January, because all stocks that have LEAPS options will have them listed in January). Then we have to see to which cycle the months belong.

Double, Triple and Quadruple Witching These are days when multiple derivative products expire on the same day. If a stock futures, stock index options, and stock options, all expire the same day, thats a Triple Witching day. Typically stocks futures expire on the last month of each quarter (Mar, Jun, Sept, Dec), so triple witching occur only on these months. Double Witching occur when any two of the three assets expire the same day. Quadruple Witching occurs when single-stock future expire on the same day as well.

Contract Size (The Multiplier) Contract Size: First start trading options is generally 100-share lots. Referred as The Multiplier since is the amount we need to multiply the option premium by to find the total cost of the contract. Ex.: if a call option is asking $3, you pay $3*100= $300 (plus Commisions). Its also the amount we must multiply to find the total cost of the contract: Ex: if you exercise a $30 call, you pay $30*100= $3,000 & receive 100 shares of stock.

Contract Size (The Multiplier) Changes in Contract Size: Most common event are stock splits. They generally occur when the price of a stock is perceived to be too high, and the company splits the stock to bring the price down. Its considered a dividend paid in shares rather than cash. Three types of stock splits Whole Number Split Fractional Split Reverse Split

Contract Size (The Multiplier) Whole Number Split: You always end up with multiple 100-share lots after the split. The most popular is 2:1. Ex.: ABC stock is trading for $180 per share. The company thinks is too expensive and announces 2:1 Stock split. If you own 100 shares of ABC prior to the split: You will own 200 shares (100 shares * {2/1} = 200 shares). Price of the stock will fall to $90 ($180 per shares/2 = $90 per share). You will be in the same position, $18,000 worth of ABC stock.

Contract Size (The Multiplier) Fractional Split: Any stock split were the second number is greater than 1 creates a fractional split, such as 3:2. Ex.: Recall the last example and now assume the stock split is 3:2. The split ratio is 3/2= 1.5. If you had 100 shares prior to the split: Youd have 150 shares (100 shares * {3/2 = 1.5} = 150 shares). The price of the stock would fall too $120 ($180 per share/ {3/2 = 1.5} = $120 per share). You will still be in the same position, $18,000 worth of stock.

Contract Size (The Multiplier) Reverse Split: In this case, a company with a very low stock price may vote for a reverse split to lift the price of the stock in hopes of being recognized as a viable investment. In certain cases, this is done to meet listing requirements so that the stock be traded on a nationally recognized exchange. Ex.: Recall the last example and now assume the split is 1:3. The split ratio is 1/3 =.33. If you had 100 shares prior to the split: Youd have 33 shares (100 shares * 0.33 = 33 shares). The price would rise too $545.45 ($180 per share/0.33 = $545.45) Youd still be in the same position, $18,000 worth of ABC stock.

Contract Size (The Multiplier) Effect on you're option contracts: Ex.: Assume you own 20 XYZ $10 calls trading for $1 and the company announces 1:5 reverse split. The split ratio is 1/5 =.20. The number of contracts you own is 4 (20 contracts*0.2 = 4 contracts). Strike price increased too $50 ($10 per share/0.20 = $50 per share). Price of the option rises to $5 ($1/0.2 = $5).

Contract Size (The Multiplier) Effect on youre option contracts (cont.): Original position: Contract price is $2,000 = $1*20 contracts*100 shares per contract. Exercise value is $20,000 = $10*20contracts*100 shares per contract. After Split Position: Contract Price is $2,000 = $5*4 contracts*100 shares per contract. Exercise value is $20,000 = $50*4 contracts*100 shares per contract. Theres no change in position, only the distribution of the investment.

Contract Adjustments for Special Dividends Many stocks pay dividends on a quarterly basis. Ex.: If a stock pays $0.80 dividend and you own 100 shares, youll receive $8 per year in youre brokerage account. Stock price is always reduced by the amount of the dividend on the date the dividend is paid, which is known as the ex-date. Regular paid dividends do not affect options. Special paid dividends reduce all call and put strikes by the same amount. Ex.: If Microsoft announces a $3 dividend and you own a $30 call or put, the strike price will be reduced to $27.

Contract Adjustments for Special Dividends The Intrinsic value of the stock doesn't change. Ex.: Recall the last example and assume that the stock trades for $35. Intrinsic value of the option is $5 ($35-$30). After $3 dividend is paid: Stock price is $32 ($35-$3). Strike price is $27 ($30-$3). Intrinsic value still remains $5 ($32-$27).

Open Interest Options Clearing Corporation (OCC) must account for the total number of outstanding contracts. The reason is because an option is created between two traders on opposite ends of an agreement. OCC need to know if a trader is entering a contract or exiting. Enter or increase position (buy to open/sell to open) Vs. Exiting or reducing position (sell to close/buy to close).

Open Interest Open interest keeps track of how many open contracts there are for a specific option. You must count either all long positions or all short positions to get the number of outstanding contracts. Whenever both traders are entering opening transactions, then the open interest will increase. Whenever both traders are exiting closing transactions, then the open interest will decrease. If one trader is entering and the other closing, then open interest remains unchanged.

Open Interest Open interest is used as a liquidity guide. Ex.: NDX is trading around 1,550 contracts for the $1550 call trading for $108. The open interest is 1,578. 1,578*$108 per share*100 shares = $17,000,000 represented in this option.

Call Options Early Exercise: American Style option can be exercised at any time prior to expiration. For many traders, the exercise restrictions on European options are considered as negative features. It is never advantageous to exercise a call option early, with the exception of the investors that want to collect upcoming dividends on stock.

Call Options Early Exercise on a Non- Dividend Paying Stock: Ex.: Investor#1 buys a stock for $50, and Invetor#2 buys a $50 call for $2. If the stock is trading for $60 at expiration: Invetor#1 gains $10 ($60-$50) Investor#2 gains $8 ($60-$52) If the stock rises price, both profit dollar for dollar from the stock. If the stock price drops, the option holder only loses $2 while the stock holder loses dollar for dollar for the drop.

Call Options Exercising a Call to Collect a Dividend: Designed to offset a loss and not for a financial gain. Ex.: Assume that a stock is trading for $50 and pays $1 dividend. You own a $40 call that is trading at parity for $10. The day the dividend is paid, the stock value decreases by $1. If you exercise the call: $10 of unrealized gain, while lose $1 of stock price. You get dividend of $1. Therefore you now have $9 of unrealized gain and $1 of realized gain.

Put Options With put options, if the stock is sufficiently in the money, it doesnt make sense to exercise early. The difference with the call option, with a put option you're trying to get rid of a risky asset and receiving cash. If you delay the exercise of the put, you only lose the interest you could have earned on the cash.

Mechanics of Exercising a Call to Collect Dividends If an investor wishes to collect the dividend on a stock, he must exercise the call to gain control of it. He must be a stockholder before the record date to be eligible to receive the dividend. Investor must focus to exercise the call option before the ex-date to assure to buy the stock with the dividend. If an investor buy on or after the ex-date, he buys the stock without the dividend.

Why Is There So Much Confusion In Practice? For investors, to figure out who gets the dividend is not as easy as it seems. Many times they get confused and are unable to find the appropriate date the stock must be buy in order to receive the dividend payment. The reason for this confusion is due to three dates associated with the dividend announcement: Record date Payable date Ex-date

Why Is There So Much Confusion In Practice? (cont) Corporations usually only publicize the record date and payable date. The record date is the only date that matters to the company. Before making the dividend payment, the company looks at a list of names of the stock owners as of the record date and pay the dividends to them. The payable date is when the payment is actually made, which may be a week or more after the record date.

Why Is There So Much Confusion In Practice? (cont) In order to be the owner of record, the stock transaction must be settled by the record date. There is currently a three- business-day settlement period (trade date plus three business day). For example, if you buy a stock on Monday it will be settle on Thursday. Suppose that the record date is on March 10, if you want to own the stock by that date, you need to make your purchase on March 7 or before. If you buy the stock on March 8 or later you will not be the owner as of the record date (you will not receive the dividend payment).

Why Is There So Much Confusion In Practice? (cont) All the confusion has to do with the timing of the settlement period. Many investors think they just need to buy the stocks on or before the record date in order to collect the dividend. The truth is they have to make the purchase three business days before the record date. The ex-date is an artificial creation of brokerage firms to mathematically figure out the purchase date that makes you owner by the record date. If the company announces a March 10 record date, the ex-date would be March 8. If you buy the stock on March 8 or later, you will not be the owner of the stock by the record date ( wont receive the next dividend payment)

Why Is There So Much Confusion In Practice? (cont) After understanding the stock settlement process, adding call options to the figure is not complicated. If you own a call option and wish to exercise it in order to collect the dividend, you must exercise the call the day before the ex-date.

Does It Really Matters If The Stock Holders Get The Dividend? Mathematically, there is no difference if stockholders get the dividend or not. The reason there is not mathematical difference is that the stock price is reduced by the amount of the dividend on the ex-date. For instance, if an investor buy one share of stock for $100 before the ex-date and collect a dividend payment of $2, on the ex-date the stock will decline to $98 and the total value of his account will remain the same: $98 + $ 2= $100.

Rules Violation: Selling Dividends Many brokers take advantage of investors by touting an immediate return on your money by purchasing stock just before the ex-date. A broker may call saying if you purchase a stock for $100, you will receive a 2% return on your money the very next day. By now you should know this is not true. For tax reasons, buying the stock just to get the dividend is not a good idea. When an investor buys on share of stock for $100, he is paying with after-tax dollars, he doesnt owe tax on the $100. However, if you buy the stock before the ex-date you will owe taxes on the dividend payment.

Rules Violation: Selling Dividends (cont.) For these reasons the NASD (National Association Of Security Dealers) prohibits brokers of selling you stocks exclusively for the reason of collecting the dividend.

Types of Options Orders To understand the many terms associated with placing orders is crucial, particularly in todays market when most people make trades online and there is no interaction with a broker. Making the Trade There are five basics pieces of information you must specify when you are buying or selling options: Action (buy or sell) Quantity (number of contracts) Symbol Price Time

Types of Options Orders The action, quantity and Symbol are all basic and dont need explanation. But price and time fields are the ones that create the most questions and unexpected surprises. Price When placing an order to buy or sell, you must provide some information about the price at which you are willing to make the deal. There are two ways to provide price information: Market Order Limit Order

Types of Options Orders Market Order A market order guarantees that your order will be filled but does not guarantee the price at which the transaction will be made. If you place an order to buy option calls At market you know for sure that you have purchased the calls, but in order that is transaction to be guaranteed, it means that you must be flexible on the price. A market order guaranteed the execution but not the price.

Types of Options Orders Multiple Fills If you place an order, it is possible that the order comes back filled at multiple prices. This means the traders were only able to get a certain number of contracts at one price and had to fill the balance at one or more prices. Limit Orders A limit order is one where the price is specified. When buying options, the order cannot be filled at a price higher than your limit price. When selling options, the order cannot be filled at a price lower than your limit price. Limit orders guarantee the price but not the execution

Types of Options Orders Tick Size The tick size are the minimum amounts that the price can change when submitting option orders. There is a five-cent ticked size for the option orders at the current price and below and a ten-cent ticked size for option orders above the current price. Why is not possible to guaranteed the execution and price? If both, execution and price could be guaranteed, investors could buy an expensive option for a very low price an then sell it at a higher price, which is simply not possible.

Types of Options Orders Or-Better Orders An or-better order qualifier is a type of limit order where your buy price is stated above the current market price and your sell limit is placed below the current market price. This type of order reduces the risks of the market and limit orders. All-or-None (AON) When an investor do not wish to get a partial fill, he could place all-or-none restriction in his order. This just tells the market makers to not fill your order until they can fill the entire number of contracts you requested.

Types of Options Orders Time Limits In addition to setting a price when entering your order, you must also specify the time limit for which the order is good. This is true for any bid to buy or offer to sale. There are to basic choices for time limits: Day Order Good til Cancelled (GTC)

Types of Options Orders Day Orders This type of order is only good for the trading day. When placing an order after the market close, then it will be good only for the following business day. Any market order can only be entered as day order for the fact that markets orders are guaranteed to fill. Good til Cancelled Orders Good til cancelled orders may only be used for limit orders. GTC orders can be a useful tool that keeps you from having to retype orders that do not fill.

Stop limit order Stop orders are conditional orders to buy or sell at market. Your stop price is simply a price at which point the trade is triggered (technically elected), which makes it a live market order, in which the execution is guaranteed but not the price. Your order will be triggered if the stock trades at or below your stock price. A stop limit order is an extension of a stop order. The difference is that stop limit orders convert to a limit order, which means your shares will be sold only if the limit price or higher can be and guarantee a price. But as with any limit order, if you guarantee the price, you cannot guarantee the fill. In order to place a stop limit order, you must specify two prices. The first price is the stop price. Once you specify the stop price you must then specify a stop limit price (which must be less than or equal to your stop price).

Which should you use? If your stock opens below your stop price do you want to sell the shares at any price? Is your goal to simply get rid of the shares regardless of price? If the answer is yes, then use a stop order. However, if there is a price at which youd rather hold onto the shares rather than sell then use a stop limit order.

Option Stop Order: difference Options stop orders and stop limits are not based on the last trade. The reason is that it is possible to not have any trades on the option even if the stock price is falling. However the bid price and asking prices on the options will definitely change in response to the falling stock price.

Understanding the Quote system Assume the market is not open yet and the maker has no orders on the books. When orders are placed through the various brokerage firms, the market maker will accumulate them in a specific manner. Assume that the first order is an order to buy 5 contracts at a limit of $1.90. Because this is an order to buy, the market maker will list it under the bid column. Assume that the next order is an order to buy 10 contracts at a limit of $2.00. Because this is another buy order the market make will place it under the bid column as well. However, this trader is considering a stronger buyer since his buy price is higher than the person at $1.90 the markets are only concerned with the highest bidder and lowest offer. Notice how the orders are being stacked. The bids are being stacked in descending order from strongest to weakest; that is, from highest to lowest. The sellers are stacked in ascending order from strongest to weakest, that is, from lowest to highest.

Understanding the Quote system (Cont.) The process continues until all the orders are on the books. Of course, the final list will be quite long, but the entire system is automated so it happens very quickly. The difference between the bid and ask is called the bid asked spread or, more simply, the spread. The market makers must be ready to keep a liquid and orderly market when one is not available. If the market is quite liquid and competitive, it is possible that the inside quote is strictly due to retail traders. While the market makers usually have some presence at the bid and ask, it is possible that it is represented by only retail traders at certain times. Higher bids and lower offers will reduce the spread between the bids and ask. Higher bids attract sellers and lower offers attract buyers, both create more contracts traded in the marketplace.

Limit order display rule In order to ensure that higher bids and lower offers would be shown; the exchanges created the Limit Order Display Rule, which we can use to our advantage once you understand how it works. The limit order display rule, sometimes called the Show or Fill Rule is not a rule that the market makers make very well known for obvious reasons, as we shall soon see. However, knowing this rule can make a big difference in your option profits. It works: lets assume you wish to place an order to buy 2 contracts. You dont wish to pay the current asking price of $2.25 so you put in an order for something between the bid and ask, say $2.15. When the market maker receives the order, he now has one of two choices: He can either fill the order or show the order. If he chooses to not fill the order, he must show it by allowing you to jump in front of the line. The narrower the spread, the more efficient the market. The limit order display rule was created for that very reason. Before the rule, market makers could hide your order from the public and just leave the quote at bid 2.00 and ask 2.25.

Advantages Having the ability to compete with market makers and their quotes is certainly an advantage, you can provide a stronger incentive for someone to sell at the new higher price, and there is a better chance that you will get filled. And theres an additional advantage you can gain. There is an exchange policy that all quotes must be good for at least 20 contracts. It is up to the market makers to make sure that all quotes are good for at least 20 contracts, and we can use that to our advantage. Think of what a difference that trading between the bid and ask can make on your trades, especially when you consider that it works for the sell side, too. Whether you are buying or selling a small number of contracts, you have an advantage of submitting limit orders between the bids and ask.

Rule when you are trading options If you are trading small number of contracts, say up to seven, there is a very good chance you can trade between the bid and ask and get filled for no other reason than the market maker wanting to avoid the additional liability of having to complete the 20- contract exchange rule.

All-or-non- restrictions All-or-non- restrictions, especially for less than 50 contracts; If you place an order will an all-or-none restriction, youre telling the market maker that he can only fill the order in its entirety, he cannot come back with a partial fill. Because of this, many options traders believe that they should mark all orders with an all-or-none restriction to prevent partial fills. However there is the danger that the market is not required to show your order if it is marked all-or- none. If youre placing larger quantities of contracts its best to do one of 2 things. First, you can feed your contracts into the market in smaller lots, perhaps placing four trades of five contracts each. Many brokers though will charge 4 separate commissions to do this, so it may not be advantageous. But if your broker aggregates all orders by symbol and side (buy or sell) at the end of the day, this may be a visible choice for you. The second thing you can do is mark your order with a not held qualifier, which means you are not holding the floor broker accountable to time and sales. If you do not mark an order as not held, you can hold the broker accountable.

Spread behavior Why do some option quotes have relatively small spreads, say 5 cents, while other have much wider spreads such as 20 cents? Many traders believe this is the market maker playing games or trying to squeeze out extra money from the more active options. The spread is simply a reflection of the volume. Lower volume options have higher spreads, while higher volume options have narrow spreads. To show how the supply of an option is created. If you want more supply, you (or the market maker) must bid the contract higher. The higher the price, the more sellers will step in and unload contracts. Traders often have difficulty understanding how they can control the supply. Price is the answer.

Market clearing price A market clearing price is the price where all who want to buy and sell at that price can do so. In an example, a price of $4 means that 50 contracts will be purchased and sold. If the price were higher, wed get more sellers than buyers. If the price were lower, wed get more buyers than sellers. At a price of $4, there are an equal number of buyers and sellers and the market clears

Option Price In the real world of options, we do not just have a single price. Instead, we have a bid-ask spread, which tends to reduce the value. However because of the two-price system, we can find an equilibrium point and the market can clear. The wider the spread, the lower the volume. Conversely, the lower the volume, the wider the spread must be to balance supply and demand. So the bid-ask spread is purely a function of the supply and demand for an option.

Disclaimer DISCLAIMER: THE DATA CONTAINED HEREIN IS BELIEVED TO BE RELIABLE BUT CANNOT BE GUARANTEED AS TO RELIABILITY, ACCURACY, OR COMPLETENESS; AND, AS SUCH ARE SUBJECT TO CHANGE WITHOUT NOTICE. WE WILL NOT BE RESPONSIBLE FOR ANYTHING, WHICH MAY RESULT FROM RELIANCE ON THIS DATA OR THE OPINIONS EXPRESSED HERE IN. DISCLOSURE OF RISK: THE RISK OF LOSS IN TRADING FUTURES, FOREX AND OPTIONS CAN BE SUBSTANTIAL; THEREFORE, ONLY GENUINE RISK FUNDS SHOULD BE USED. FUTURES, FOREX AND OPTIONS MAY NOT BE SUITABLE INVESTMENTS FOR ALL INDIVIDUALS, AND INDIVIDUALS SHOULD CAREFULLY CONSIDER THEIR FINANCIAL CONDITION IN DECIDING WHETHER TO TRADE. OPTION TRADERS SHOULD BE AWARE THAT THE EXERCISE OF A LONG OPTION WOULD RESULT IN A FUTURES OR FOREX POSITION.HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL, OR IS LIKELY TO, ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM, IN SPITE OF TRADING LOSSES, ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS, IN GENERAL, OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. PS. In our opinion, we believe, it may be possible, that heavy smoking and drinking may be hazardous to your health. If you choose to smoke and drink while trading, The Delano Max Wealth Institute nor Dr. Scott Brown is liable for any damage it may cause. If you slip and fall on the ice, we're not liable for that either.

dr. scott brown stock options. options symbol an option symbol is a code by which options are...

Documents