- Javed Siddique has over 20 years of experience on Wall Street and currently works as a portfolio manager, trader, and researcher. He holds degrees from Wharton and NYU. - The presentation covers technical analysis and introductory options concepts. On technicals, it discusses the importance of price trends, support/resistance, candlestick patterns, and measuring moves. - The options introduction defines calls, puts, strike prices, expiration, and the factors determining option prices like volatility and time value. It also discusses the strategies of being a buyer or seller of options.

1. Technicals and
Intro to Options
Javed Siddique
January 2019

2. Who is Javed Siddique?
• 20 Years on Wall Street
• Wharton School BS Economics 1998
• New York University MBA 2005
• Jefferies & Company, Investment Banking, Equity Research
• Dorchester Management, Portfolio Manager, Trader, Research
• MUFG, Team Leader, Head of Energy and Infrastructure Research
• Live in East Brunswick, NJ – Married with 2 kids
• Personal Interests – Sailing, Cycling and Snowboarding
• Linkedin: https://www.linkedin.com/in/javed-siddique-b88a79/

3. Agenda
• Technicals
• Basic Options Theory
• Q&A

4. Technicals

5. Technicals - Philosophy
• The only truth is price
• Price follows price
• Futures, Commodities, Currencies, Rates – Drives Stocks
• Which comes first – news or technicals?
• Technicals provide the roadmap
• News helps securities to travel down the road
• Asset classes are correlated
• Is diversifiable risk worth the trade?
• Trade diversified securities

6. Why do Technicals Work? – Greed and Fear
• Psychology of people does not change
• Hasn’t changed since the beginning of time
• People are always greedy and they are all fearful
• That is why technical work – technical are the tools to help you
READ
GREED and FEAR in the MARKET

7. Old Support Becomes New Resistance

8. Congestion Zones and Support/Resistance

9. Trend is Your Friend – Until it Bends

10. Trading an Uptrend

11. Trading a Downtrend

12. Channel Trading

13. Candlestick Patterns
• Candlesticks are a battle between bulls and bears
• Who is winning and losing?
• Candles vs. Line and Bar Charts
• Reversal Patterns
• Dojis
• Hammers
• Continuation patterns
• 3 marching men

14. Doji

15. Hammer

16. Marching Men

17. Measured Moves
• Find targets based on the measured move
• Rounded tops and bottoms
• V tops and bottoms
• Cup and Handle
• Bear Flags
• Bull Flags

18. Measured Moves – Rounded Bottoms

19. Measured Moves – Double Bottom

20. Measured Moves – Bull Flag

21. Measured Moves – Bear Flag

22. Other Technical Topics
• Channel Trading
• Congestion
• Trade to the middle of the congestion
• Path of least resistance
• Long term trends vs short term trends
• Time frame of the charts

23. Other Technical Topics
• Moving Averages
• Be early without getting whipsawed
• Tick vs Time
• Limit order book
• Symmetry
• In Price
• In time

24. Trading Psychology
• Analysis Paralysis
• Pulling the trigger
• Portfolio Manager and Trader
• Buddy system
• Trade in a group
• WhatsApp, Ryver, Slack
• Meetup in person
• Trade the “big boy” charts – long-term

25. Asset Class Correlation
• Most stocks move in the general direction of the indices
• Individual stocks are less harmonic than indices, currencies,
commodities and futures
• Due to diversifiable risk – earnings, management, company-
specific issues/
• Diversified securities take out this noise and follow trends and/or
revert to the mean

26. Intro to Options

27. How do I make money using options
• Options allow you to sell time
• It is like being a landlord that rents out a house or apartment
• Think of Airbnb - you have some extra space and you want to
monetize it to a tenant who would like to rent it out
• This strategy can be employed as a seller of options
• Instead of renting out your spare room, you are renting out the
option to buy or sell shares of stock, ETF or futures contract
• But you don’t have to worry about non-payment of rent, making
repairs or finding a new tenant

28. Options Building Blocks
• What is an option?
• Calls and Puts
• Strike Price
• Expiration
• Option Price
• Volatility
• Buyer or Seller?

29. What is an option?
• An option is a financial derivative that gives the buyer the right to
buy or sell stock at an agreed upon price during a certain period of
time.
• Call Option – Right to buy stock
• Put Option – Right to sell stock
• Strike (Exercise) Price – Price at which you can buy or sell the
stock
• Expiration – Date by which you can exercise the option

30. Long Call Option Payoff

31. Short Call Option Payoff

32. Long Put Option Payoff

33. Short Put Option Payoff

34. What determines the option price?
• Option price = premium = intrinsic value + volatility + time value
• Intrinsic Value = Difference between X (strike) and S (stock price)
• Call Intrinsic Value = X – S
• Put Intrinsic Value = S – X
• Time Value = Time to expiration – more time = more value
• Volatility = Up and Down movement – more volatility = more value

35. Should you be a buyer or seller?
• Different philosophies and strategies
• Volatility driven strategy = Buy when volatility is low and sell
when volatility is high
• Time driven strategy = Always be a seller – time is on your side
since the option is constantly decaying – clipping coupons like
bond payments
• DON’T TAKE NAKED POSITIONS!!!!

36. Q&A