- 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.
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/
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
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
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
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
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
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!!!!