Thursday, August 8, 2019

Financial Markets - Understanding Stock Option Information Essay

Financial Markets - Understanding Stock Option Information - Essay Example â€Å"Technical analysis is the study of specific securities and the overall market based on supply/demand relationships.† (Page 1, International encyclopedia of Technical Analysis, Joel G Siegle, Jae K Shim, Anique Quereshi, Jeffrey Brauchler.) Charts and Graphs are the technician’s tools. They interpolate data and decide using graph trends, volume count, and 50 and 200 day moving average charts. To understand patterns one must observe carefully the breadth and movement of the market. Understand how accumulation or distribution (Accumulation, the buying of stock, distribution is the sale of stock.), forecast the future expectation of stocks or options. (Ascending and Descending tops P. 15 International Encyclopedia of Technical Analysis Page 15 and 16,), these illustrations show ascending and descending price top transitions, from time period- to- time period, that trail stock directions. Volatility charts show extremes —specifically, option volatility charts sh ow relationships between puts, calls, strike prices, and expiration dates. Assumption associations are derived from historical patterns, price patterns, and supply and demand relationship. Historical relationships signal the likeness of direction, whereas, price patterns point to quantity of decrease and increase. â€Å"Market factors (Interest rate changes, economic conditions, political factors, announced pending acquisitions.), are already incorporated into current market price per share. If demand exceeds supply, the stock price will increase, and vice versa.†

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