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Tag: Trading

  • At The Money: Definition, how it works and example

    At The Money: Definition, how it works and example

    At the money (ATM) is a term used in options trading to describe a situation where the strike price of an option is exactly equal to the current market price of the underlying asset. This means that neither call nor put options have intrinsic value when they are ATM; their value is entirely derived from time value or extrinsic value.

    For example, if a stock is trading at ₹100, then a call option and a put option with a strike price of ₹100 are both considered ATM.

    How It Works

    The concept of ATM in F&O is crucial for understanding options pricing and trading strategies. When an option is ATM:

    • Intrinsic Value: The intrinsic value is zero because exercising the option does not yield any profit. For a call option, this means the market price is not above the strike price; for a put option, it means the market price is not below the strike price.

    • Extrinsic Value: The entire value of an ATM option comes from its extrinsic value, which reflects factors such as time until expiration and implied volatility. As expiration approaches, the extrinsic value diminishes due to time decay.

    • Sensitivity to Price Changes: ATM options are highly sensitive to changes in the underlying asset’s price. They typically have a delta of approximately ±0.50, meaning that for every ₹1 change in the underlying asset’s price, the option’s price will change by about ₹0.50.

    Consider a stock currently trading at ₹150. If you purchase an ATM call option with a strike price of ₹150, here’s how it could play out:

    • If the stock price rises to ₹160, you can exercise your option to buy at ₹150 and sell at ₹160, realizing a profit of ₹10 per share (minus any premium paid for the option).

    • Conversely, if the stock price falls to ₹140, your call option would expire worthless since you wouldn’t exercise it at a loss. Your loss would be limited to the premium paid for the option.

    How to use ATM in Trading Strategies

    ATM options are often used in various trading strategies due to their unique characteristics:

    • Straddles and Strangles: Traders may buy both an ATM call and put option simultaneously to profit from significant price movements in either direction.

    • High Trading Volume: Options that are ATM tend to see higher trading volumes as traders anticipate volatility, making them attractive for short-term strategies.

    • Risk Management: While they offer opportunities for profit through volatility, ATM options also carry higher risks compared to in-the-money (ITM) options since they lack intrinsic value at purchase.

    How is ATM different from ITM and OTM in terms of risk and reward?

    When trading options, understanding the distinctions between At The Money (ATM), In The Money (ITM), and Out Of The Money (OTM) options is crucial for assessing risk and reward. Each type of option has unique characteristics that influence their potential outcomes.

    • In The Money (ITM): An option is considered ITM when it has intrinsic value. For a call option, this means the strike price is below the current market price of the underlying asset. For a put option, it means the strike price is above the current market price.

    • At The Money (ATM): An option is ATM when its strike price is equal to the current market price of the underlying asset. ATM options have no intrinsic value; their worth is derived solely from extrinsic value.

    • Out Of The Money (OTM): An option is OTM when it has no intrinsic value. For a call option, this occurs when the strike price is above the current market price; for a put option, it occurs when the strike price is below the market price.

    Risk and reward analysis for ATM, ITM, OTM

    Option type

    Risk level

    Reward potential

    Characteristics
    ITM Low Moderate Less risky because they have intrinsic value. They provide some return with minor favourable movements but require a higher upfront premium. This leads to lower percentage returns compared to OTM options
    ATM Moderate Balanced Offer a balanced approach to risk and reward. They are sensitive to price changes and have high extrinsic value. If the underlying asset does not move significantly, ATM options can expire worthless, resulting in total loss of the premium paid
    OTM High High They have lower premiums since they lack intrinsic value and require significant movement in the underlying asset’s price to become profitable. However, if such movement occurs, OTM options can yield substantial percentage returns

    Factors to consider when choosing between ITM, ATM, and OTM options

    When deciding between In The Money (ITM), At The Money (ATM), and Out Of The Money (OTM) options, traders should evaluate several key factors that influence their risk tolerance, market expectations, and overall trading strategy.

    1. Risk Tolerance

    • ITM Options: Generally considered less risky due to their intrinsic value. They provide a buffer against total loss if the underlying asset moves unfavorably. Suitable for conservative traders looking for steady returns.

    • ATM Options: Offer a balanced risk-reward profile. While they have no intrinsic value at the time of purchase, they can still provide significant returns if the underlying asset moves favorably. They are suitable for traders with moderate risk tolerance.

    • OTM Options: High-risk, high-reward instruments. They have no intrinsic value and require significant price movement in the underlying asset to become profitable. Best for aggressive traders willing to accept the possibility of total loss.

    2. Market Expectations

    • Bullish Outlook: If you expect a strong upward movement in the underlying asset, OTM options may be appealing due to their potential for high returns. Conversely, if you expect moderate increases, ATM options could be more suitable.

    • Bearish or Sideways Outlook: For a bearish view or if you anticipate minimal movement, ITM options might be preferable as they provide some return even in sideways markets.

    3. Time Until Expiration

    • Time Decay (Theta): ATM options experience rapid time decay as expiration approaches, which can erode their value quickly if the underlying asset does not move significantly. ITM options tend to hold value better over time due to their intrinsic component.

    • Longer Time Horizons: If you have a longer time until expiration, OTM options may be more attractive as they allow for potential price movements without immediate pressure from time decay.

    5. Premium Costs

    • Cost of Entry: ITM options typically have higher premiums due to their intrinsic value, making them more expensive upfront. ATM options are usually priced in between ITM and OTM options, while OTM options are the cheapest but come with higher risk.

    • Return on Investment: Assess the potential return relative to the premium paid. OTM options may offer higher percentage returns if the underlying asset moves favourably, but they also carry a higher likelihood of expiring worthless.

    Wrapping up

    Understanding ATM options is essential for traders looking to navigate the complexities of options markets effectively. They provide opportunities for profit through volatility while also presenting risks that must be carefully managed.

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  • Unveiling Exness: A Comprehensive Review

    Unveiling Exness: A Comprehensive Review

    Exness has become a prominent player in the wide-ranging forex brokerage market. However, with so many options available to traders, one question remains unanswered: is Exness a scam?

    Don’t worry, though, as we set out to investigate the nuances of Exness in our thorough review, carefully analyzing its features, products, and reputation. With this examination, we hope to lift the mysterious hood over Exness and reveal more about its legitimacy and dependability as a forex broker.

    Background and Overview

    Exness was established in 2008 and has grown to become a major force in the forex brokerage market, serving traders from a variety of geographical areas.

    With its headquarters located in Cyprus, the broker is subject to the regulatory oversight of entities like the Financial Conduct Authority (FCA) in the UK and the Cyprus Securities and Exchange Commission (CySEC), which guarantees compliance and responsibility. Equipped with a user-friendly interface, attractive trading conditions, and a wide range of trading instruments, Exness has gained popularity among traders worldwide.

    Regulatory Compliance

    When examining a forex broker’s credibility, regulatory compliance is the most important consideration. One comforting thing to know about Exness is that they are licensed by reputable regulatory organizations such as FCA and CySEC.

    Not only do these watchdogs provide entertainment value, but they also enforce legal regulations that hold brokers accountable for fair and open trading practices. Exness’s regulatory credentials allow traders to feel easy knowing that their broker abides by the law and looks out for their best interests.

    Trading Instruments and Platforms

    Exness has a comprehensive portfolio of trading instruments, encompassing major and minor currency pairings, commodities, indices, and even cryptocurrencies. Not only that, but traders may access these products through the renowned MetaTrader 4 (MT4) and MetaTrader 5 (MT5) platforms, which are renowned for their svelte design, sophisticated charting features, and blazingly quick trade execution.

    Exness sweetens the pot with its exclusive web-based platform, which guarantees accessibility and ease for individuals who want to trade whenever inspiration strikes.

    Trading Conditions

    Competitive circumstances are the name of the game in the trading arena. With razor-thin spreads, lightning-fast trade execution, and virtually nonexistent mistakes, Exness rises to the occasion. Whether you’re a novice or an experienced trader, these benefits set the setting for an ideal trading experience.

    Additionally, Exness offers variable leverage choices, enabling traders to maximize profits while controlling risk. But remember, use it responsibly just like any other ability. When trading leverage, traders must always keep a risk management playbook close at hand.

    Fees and Commissions

    Like reading the tiny print of a contract, transparency is essential while navigating the financial world. Exness offers a commission-based strategy for certain accounts and spreads-only pricing for others, taking a hybrid approach to fees.

    They are all focused on ensuring traders receive the most value for their money by maintaining low transaction fees and competitive expenses. However, before you get right into the trading pool, review the account information and charge schedule. After all, in the world of business, information truly is power.

    Security Measures

    Security acts as the sheriff in the virtual Wild West of online trade, keeping the bad guys away. When it comes to safeguarding your private information and hard-earned money, Exness does not play around. With features like strong encryption and firewalls akin to fortresses, they have everything you need to make sure your valuables are as safe and secure as Fort Knox.

    You may also feel confident knowing that your account is as safe as Fort Knox thanks to segregated client money and two-factor authentication (2FA) on guard. It’s like having a cyber-security posse on guard as you manage those swings in the market.

    Customer Support

    Having customer service that is as dependable as your morning coffee is essential in the volatile world of trading. Exness’s support staff is like your trading buddy—always on hand to step in and rescue the day—so you never have to worry about them abandoning you when you need assistance.

    They’re available to you around the clock, in your native tongue, by phone, email, or chat. They can provide you with professional guidance more quickly than you can say “bull market.” It’s as easy as silk to navigate the ups and downs of trading when you have a trading partner at your side – prepared to take on any obstacle.

    Client Feedback and Reputation

    When it comes to brokerage ratings, customer reviews are the real deal. They’re similar to Yelp for traders in that they can tell you if a broker is a good investment or a scam. Exness seems to have its own fan club these days, with merchants praising it as if it were the best new brunch place in town.

    But remember, there is always a thorn in every rose, and Exness is no different. It’s getting some shade from the doubters even as it enjoys the warmth of glowing praise.

    Closing Remarks: Is Exness a Legitimate Broker?

    It appears like Exness is the genuine deal—a legitimate forex broker with all the extras. It’s like the forex industry’s superhero, swooping in to save traders from the grip of uncertainty with its regulatory badges, delicious trading conditions, and fortress-like security precautions. 

    However, let’s exercise prudence first for the time being. It pays to do your study, determine what floats your trading boat, and consider your alternatives like an experienced pro before signing up with Exness or any other broker. 
     

  • GroupM India names Ashwin Padmanabhan as president – investments, trading and partnerships

    GroupM India names Ashwin Padmanabhan as president – investments, trading and partnerships

    Mumbai: GroupM India announced on Wednesday that Ashwin Padmanabhan will be promoted to president-investments, trading, and partnerships. Padmanabhan, who earlier led ‘Trading’ and ‘Partnerships’ will now also be taking on the ‘Investments’ portfolio from Sidharth Parashar. Parashar will be joining the APAC Mindshare leadership team as chief investment officer, Mindshare APAC, and will now be based out of Singapore.

    Padmanabhan will continue to report to GroupM South Asia CEO Prasanth Kumar and be based out of the Gurgaon campus. Over the next three months, Parashar and Padmanabhan will work closely to ensure a seamless transition into their respective new roles along with their key leadership team.

    GroupM South Asia CEO Prasanth Kumar said, “Sidharth has had a phenomenal career journey where the organisation has witnessed his evolution from a practise expert to a leader over the last 18 years with GroupM. He has successfully led investment mandates across all media, elevating the practise through innovative products and exceptional value for our clients. I would like to wish him the very best and will continue to work closely with him as he drives the regional investment strategy for Mindshare.”

    “I am also excited to see Ashwin taking over this additional role. He has a deep understanding of the business, and we continue to benefit from his knowledge of the media ecosystem. Focusing on cutting-edge innovation backed by his solid process orientation is a value-add for clients. His ‘start-up’ mindset has helped GroupM venture into new practices, deploying creativity to our products and solutions, keeping client delight at the helm,” he added.

    Parashar will report to Mindshare APAC chief executive officer Helen McRae, and work on enhancing Mindshare’s local market investment strategy and driving thinking on the opportunity of good growth and intentional investment for the region.

    Helen McRae said, “I am very pleased that Sid will be joining our regional team. He brings a tremendous depth of expertise and will be a great champion of good growth for our clients.”

    Sidharth Parashar said, “It has been an amazing journey at GroupM, and I am delighted to now take over this new Mindshare APAC investment role. I look forward to this opportunity in new markets to build value for our client’s business.”

    Ashwin Padmanabhan said, “GroupM has been a fertile ground for innovation and creating value in a highly entrepreneurial environment. This expanded remit motivates me to renew my focus on the GroupM value proposition for our clients, media partners, and technology partners. We want to keep the momentum up with these relentless efforts toward improving today for a better tomorrow.”

  • Dentsu India onboards Ramsai Suriyanarayanan as managing partner – trading, media

    Dentsu India onboards Ramsai Suriyanarayanan as managing partner – trading, media

    Mumbai: Dentsu India has appointed Ramsai Suriyanarayanan as managing partner- trading, media. In his new role, Suriyanarayanan will lead media investments for Reckitt and play an integral role in developing dentsu Media’s investment model and portfolio, said the company.

    Speaking on the appointment, dentsu Media South Asia  CEO Divya Karani said, “We are elated to welcome Suriyanarayanan to the team. He will collaborate with our agencies and media partners to create ROI and deliver value to our clients across media in today’s dynamic media industry.”

    Suriyanarayanan has over 25 years of experience, with almost 14 years at senior positions across procurement, sales and marketing functions in the media industry. In the past, he has driven many industry-first innovations across multiple clients and sectors.

    Commenting on his new journey, Ramsai Suriyanarayanan stated, “It is a privilege to join this team that combines the needs of the clients with consumer intelligence insights, unlocking unique possibilities for sustainable value and lasting change. I look forward to the association and contribute to the greater objectives of dentsu and our clients.”

  • ‘Buying Bitcoin is simple’ WazirX says in new campaign

    ‘Buying Bitcoin is simple’ WazirX says in new campaign

    Mumbai: Cryptocurrency trading remains mystifying to an average person in India. And with the crypto space in the country mired in debates surrounding its regulations and the support provided by local banks, its prospects are seemingly at odds with consumers. To dispel any such doubts associated with the apparent complexity of trading in the digital currency from people’s minds, crypto exchange WazirX has launched a campaign positioning itself as the go-to platform for buying and selling cryptocurrencies in India – ‘India ka Bitcoin exchange’.

    A series of three short films starring actor Ayush Sharma revolve around the game of football where two players are seen practicing with their team. One of the players is sceptical about cryptocurrencies and what he believes to be complications in trading or investing in digital currency. Drawing parallels with the game, his companion shows him how easy it is to trade in Bitcoins by using the app. The second film tries to depict the popularity of crypto trading with the young gen, by showing that 10 of the 11 players in the team use the platform to invest in cryptocurrency. Finally, the third film shows the disbeliever to be converted into a WazirX user and instead of giving out futile information to his friend on Bitcoin trading.

    With this campaign centred around the game, WazirX, who is also the co-presenting sponsor for the live streaming of the UEFA EURO 2020 on SonyLIV, aims to drive brand awareness amongst the young football fans and further its brand mission to make crypto accessible to everyone in India. It also offers the company extensive visibility amongst the Indian football fans, many of whom are young, tech-savvy individuals known to be the primary users of crypto trading platforms.

    WazirX co-founder and CEO, Nishcal Shetty recently tweeted that innovative technologies don’t gain adoption overnight. “In Crypto, an entire ecosystem has to be built & it takes time. Let’s continue to build the future of global finance. It started slow, it has picked up the pace and soon, it’ll be everywhere,” he wrote.

  • Moneycontrol joins hands with WazirX to track cryptocurrency with ease

    Moneycontrol joins hands with WazirX to track cryptocurrency with ease

    Mumbai: Gaining prominence rapidly, cryptocurrency is becoming one of the most popular digital assets and trading spaces. Understanding the need to track cryptocurrencies, Moneycontrol has joined hands with WazirX for better use of these digital assets during trading. 

    WazirX is one of the largest Bitcoin and cryptocurrency exchanges, and it is backed by Binance, the world’s biggest bitcoin exchange and altcoin crypto exchange in the world by volume. This new association of Moneycontrol with WazirX will help users keep track of the meteoric rise of cryptocurrencies by listing it on their platform/website, it said.

    With the launch scheduled in the next few months, the partnership will see them coming together in a product integration that will list all tokens on the Moneycontrol website and app through an API powered by WazirX. It will allow users to track the movements of the cryptocurrency by visiting Moneycontrol and accessing each token from multiple touchpoints. With cryptocurrency’s popularity surging Moneycontrol will also curate a section called ‘Cryptocontrol’ which will be a one-stop destination for all the latest news and developments on cryptocurrencies and related technology.

    “Taking into account all the speculations and confusion revolving around cryptocurrencies, we see investors struggle to understand its working and investment process. We have bridged this gap by curating a section called “Cryptocontrol” that will burst all the myths and perplexity around it as well as share the most relevant news about the same. By partnering with WazirX, we look towards spread awareness and providing clarity to our audience by helping them to track cryptocurrencies effortlessly and make an informed decision,” said News18 Media and Investments Limited COO, general news (digital) Mitul Sangani. 

    WazirX founder Nischal Shetty said, “With crypto slowly going mainstream in India, our association with Moneycontrol for Cryptocontrol aims to bring value to our crypto enthusiasts and potential investors. The key objective of this is to enable more users to access credible insights, bust the misconception that exists around cryptos and help Indians make informed decisions before investing in Crypto. We’re always looking to partner with credible institutional and industry thought-leaders like Moneycontrol to meaningfully engage with our expanding crypto community. We hope to achieve the goal through Cryptocontrol.” 

  • Netflix may hit critical point of business very soon

    Netflix may hit critical point of business very soon

    MUMBAI: Netflix may soon witness a crucial moment in its business soon. After William Blair analyst Ralph Schackart said on Monday that the stock can rise 22 per cent by the end of the year, shares of the streaming giant gained more than 3 per cent.

    Since the gain in stock in the first two weeks of 2019, Netflix stock has been stuck in a tight trading range without actually moving towards higher or lower direction. Hence, Monday’s suggestion has come as a significant boost to the OTT platform.

    According to a report from CNBC, research firm Bespoke said that this is Netflix’s tightest trading range on record and after such a long period of consolidation the stock could be poised for a big move higher or lower.

    The report also added that another analyst, Fairlead Strategies’ Katie Stockton is predicting a higher move as the stock has reached oversold levels. Moreover, the media giant is also trading above its 200-day moving average which she believes also indicates the continuation of a long-term uptrend.

    “There are a couple of things working for the chart. It’s in a long-term uptrend. We do tend to look at ranges within long-term uptrends as continuation patterns, and of course strong support and a strong tape,” she said as quoted by CNBC. But according to her, the stock needs to surpass $387 to climb even higher.

    “We need to see some kind of breakout of course from this range for a positive long-term technical catalyst, but Netflix is oversold after having underperformed, so it’s at this proving ground right now on its chart,” she added.

    While Netflix, the most expensive of the FANG stocks, trades at 78 times forward earnings, Point View Wealth Management’s John Petrides thinks the valuation is unjustified because of slowdown in subscriber growth and an increase in streaming competition.

    “The market knows that they have a first-mover advantage in streaming, but that’s really discounting very high future cash flows,” he commented as quoted by CNBC. He also thinks that Netflix is in an unfavourable position compared to peers in terms of content as “they don’t have a library” and instead buy original content.

    “They’re burning through $2 – $3 billion a year in free cash flow. The moment that stops is when I think ironically the valuation comes flying out of the stock,” he added.