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The Chicago Board of Options Exchange
The Smart Profits Report: Issue #217
Wednesday, June 15, 2005
The Chicago Board of Options Exchange: The Website Every Options Trader Should Know
By Karim Rahemtulla
Chairman, Mt. Vernon Research
There’s a lot of information out there. One of the things that we pride ourselves on is education (that’s a boring term for what we’re really doing: preparing you to do battle in the options arena).
We want you to learn more about options, more about strategies, and more about using options as part of your overall portfolio.
There are few websites out there that deliver the goods when it comes to learning about options. One of my favorites is the Chicago Board Options Exchange’s site - www.cboe.com.
The CBOE (Chicago Board Options Exchange) is one of the highest, if not THE highest, authority on options trading. And the website reflects that.
It is an SEC-regulated options exchange that provides investors with very important tools and education about options, ranging from complex strategies to calculating returns.
Where I Go for Fast, Free Online Options Info
In all of my options services, I make it a point to use the methodology that the CBOE uses for calculations of returns and explanations of how strategies work. Of course, your ultimate returns depend on how you use a strategy, where you use the strategy (an IRA, for example), and the tax implications of your transactions.
What the CBOE and other sites contribute is the nuts and bolts of options, written by options principals and experts licensed in the field of options.
And the great news: Most of this stuff is absolutely free.
A few examples of the “Trading Tools” offered at the CBOE site:
- Volatility optimizer: This includes a powerful options calculator that lets you calculate exactly how much you should pay for an option…
- Symbol directory
- New options listings
- Expiration calendar and a listing of holidays
- Cycle and strike month codes
Also, under “Quotes,” you can find current prices for all options listed on the exchange (the delayed quotes are good, but you can also fork over some dough for a premium membership to the site and get live updated data, as well).
I would absolutely encourage you to spend time exploring the CBOE site. It’s just one more resource you’ll need as someone who uses options - not just someone who “plays” options.
More Online Resources You Can Use Now
Of course, the resources you get through Smart Profits include folks who’ve traded on the floors of the markets themselves.
Take Lee Lowell, for example. Lee was an actual floor trader and market maker on the NYMEX who not only held numerous licenses, but was also on the hook for millions of dollars of REAL money changing hands at a hectic pace.
His experience with REAL money and REAL trading takes a lot of weight with me. It is the ultimate indicator of how well he knows his stuff - well enough that a lot of deep pockets trusted him to execute the right strategy and more importantly, UNDERSTAND what he was doing.
Lee also happens to be one of our most web-savvy advisors… Here are a few of the websites Lee recommends:
- www.ivolatility.com is an amazing site for volatility information, both historical and implied, and it helps me weed out stocks that have cheap and expensive options. Check out their volatility charts and option calculator.
- www.888options.com is the website for the Options Industry Council. Their main job is to get the word out to investors that options are available and useful for trading. The council does not charge fees, and you can call them toll-free with any option question you have. They also offer free software called the Options Investigator on CD-ROM.
- www.medved.net has software you can download for free called QuoteTracker that is great if you are looking for a free quote platform for stocks and indexes. QuoteTracker is a program that integrates with various datafeeds, brokers and financial sites to provide you with streaming real-time quotes, live intraday charts with technical indicators, Level II quotes, time and sales, alerts, news monitoring - and almost everything else you might need to effectively trade in today’s market.
So check out all the websites here, starting with the Chicago Board of Options Exchange. And remember: The best options traders take advantage of every good resource available - especially the free ones.
Regards,
Karim
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Today’s Smart Profits Cribsheet
- Check out the Smart Profits Glossary for definitions of option terms like “CBOE” or “market maker” found in today’s article.
- For more info on other websites that can help you with your day to day trading, swing over to Smart Profits #214, Technical Analysis - Two Simple Tools for Spotting a Technical Trend.
Related Articles:
- Smart Profits Report Recommended Website Listing
- Exit Strategies: Prenuptial Agreements for Options
- How the Market Makers Lose: Uneven Trades and Open Positions
