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Frequently asked questions Do I have to sign a long-term contract to start my subscription? Do I have to be an expert trader to learn the Index Hunter techniques? What type of internet connection do I need to access the webinars? Do I have to pay extra for technical support? Does The Index Hunter service provide advice? What if I've never traded an index option before? Do I need any trading software to use The Index Hunter service? What are the computer requirements? What is the MACD Indicator? What are options and how can I learn more about them? Do I have to sign a long-term contract to start my subscription? No. You are only required to sign a monthly contract that can be canceled at any time. Do I have to be an expert trader to learn the Index Hunter techniques? No, but some knowledge of trading using charting and technical analysis is required. What type of internet connection do I need to access the webinars? We strongly recommend high-speed Internet broadband cable or DSL. Do I have to pay extra for technical support? No. As long as you maintain your Index Hunter service, you receive free technical and customer support. Does The Index Hunter service provide advice? No. We do not provide advice. We provide you with the training so you can trade more effectively and confidently. Neither The Index Hunter, its subsidiaries, officers, employees, representatives nor independent contractors are licensed financial advisors. We strongly recommend that you consult with a licensed financial professional for all your financial advice. What if I've never traded an option before? We recommend you understand the basics of options trading, there are many good resources on the internet. Do I need any trading software to use The Index Hunter service? Recommended Trading Software
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Click here to have an AIQ representative contact you. AIQ sales 1-800-332-2999 or 1-775-832-2798 What are the computer requirements? Windows based Windows XP or Vista 1.0 GHz Processor (or faster) 1 Gb RAM (or higher) Internet Explorer 7+ or Mozilla Firefox 2.0+ High speed internet - Cable, DSL, Wireless or Satellite Screen Resolution: 1024 x 768 (or higher) Macintosh based Mac OS 10.4+ 1.0 GHz Processor (or faster) 1 Gb RAM (or higher) Mozilla Firefox 2.0+ High speed internet - Cable, DSL, Wireless or Satellite Screen Resolution: 1024 x 768 (or higher) What is the MACD Indicator? The MACDI is a two-component indicator based on two exponential moving price averages. Because of the early signals which can be derived from this indicator, it is regarded by many analysts as helpful in the trading of stock options. The first component of the MACDI is a line which represents the difference between two moving averages, each computed for a different period of time. This first component is called the Price Phase Line. The second component, which is called the Signal Line, is an exponential average of the first component. The two lines are charted together on the same time scale. The Price Phase Line is the upper line during upward price movements and the lower line during downward movements. The Signal Line, being an average of the Price Phase Line, is the lower line during upward moves and the upper line during downward moves. As a general rule, it is considered bullish when the Price Phase Line is rising and is above the Signal Line. Conversely, it is bearish when the Price Phase Line is falling and is below the Signal Line. Buy and sell signals are generated by the crossing of the two lines. In general, a buy signal occurs when the Price Phase Line crosses from below to above the Signal Line. A sell signal is indicated when the Price Phase Line crosses from above to below the Signal Line. Because of its smoothed nature, this indicator can be helpful in highly volatile markets such as the options market. Although generally less effective during narrow, trendless markets, it provides good signals during widely swinging trading ranges and at the conclusion of strong trends. MACDI is especially valuable for its ability to signal a turnaround following a sharp decline. In this situation, divergences are particularly significant and often predate important market bottoms. Divergences pertain to trends and occur when the trend of price action and the trend of an indicator are in opposite directions. In addition to trend breaks, divergences, and Signal Line crossings, it is important to watch for overbought and oversold levels. When the MACDI rises above a certain level, the ticker is in an overbought region and a reversal is likely. The same is true in the oversold direction. What are options and how can I learn more about them? Trading index options is a much different game from trading stocks. When options are traded for appreciation, it is a game of leverage, with big risks and associated big returns. One of the attractions of trading options is that you do not need a large amount of starting capital. It's also easy to play both sides of the market by purchasing call options for the upside and put options for the downside. Rules of the options game Remember that in the game of options time is your enemy. If the market moves against you, then get out of the position and take your lumps. Save the remaining principal for the next play. When you play options, you should use stop prices. Watch for sufficient volume in the option to allow for liquidity when it's time to release the position. Adequate volume would be an average volume of 100 contracts a day. Buying options for short-term appreciation This strategy involves the purchase of put or call options with the expectation that the options will increase in price. The buying of options provides great leverage but the trader runs the risk of the loss of all committed funds. The premium or price of an option responds directly to changes in the price of the underlying index. Option premium is also affected by market conditions, the public's appraisal, and very directly by the remaining life of the option. This latter aspect of premium is called the time value. As the calendar moves toward the expiration date, the time value diminishes and the value of out-of-the-money options will go to zero. For the buyer of options, a horizontal market is doom, and time is the enemy. The degree of leverage associated with a particular option depends on several factors. Strike price and the time remaining to expiration are both important factors. Leverage is always greater for out-of-the money options and decreases as the option moves deeper in the money. (The terms out-of-the-money and in-the-money refer to the strike price of the option relative to the current stock price. A call is out-of-the-money if the stock is below the strike price, and in-the money if the stock is above the strike price. The opposite is true for a put.) Leverage also increases with decreasing time to expiration. Another factor which influences leverage is the volatility of the underlying stock. More volatile stocks have higher premiums and lower volatility generally translates to higher leverage. However, this does not necessarily mean that you should look for low volatility when buying options. Low volatility implies a stock with relatively small ability to move and, therefore, limited gains. Recommended reading Gastineau, Gary L. THE OPTIONS MANUAL, 3rd ed. McGraw- Hill McMillan, Lawrence G. OPTIONS AS A STRATEGIC INVESTMENT New York Institute of Finance, New York Cox, John C. and Mark Rubinstein, OPTIONS MARKETS, Prentice-Hall, Englewood Cliffs, NJ |