 Real Gross Domestic Product (GDP)
Option Trading profits can be greatly increased by accurate predictions of market direction. Equity market direction is influenced by economic indicators, which influence the strength and direction of the economy. That makes them important in any comprehensive assessment of market direction, so it is helpful to understand them and watch them. One of the most popular and important economic indicators is Real Gross Domestic Product (GDP).
GDP is a measure of the total value of goods and services produced in the country. Inflationary increases in output are removed before calculating the growth rate in GDP over the prior period. Thus GDP is an indicator of the rate of growth or contraction of the economy. When GDP is announced quarterly, it can impact the markets significantly.
Gross National Product (GNP)
GNP is the total output of the U.S. economy. Although GDP and GNP tend to be used synonymously, GDP is the preferred measure among economists. The numerical differences tend to be small. While GDP measures all production within the U.S. by anyone working in the U.S; GNP measures the production of all Americans working anywhere in the world.
GNP = C + I + G + (X-M)
where:
C = Consumption
I = Investment
G = Government Purchases
X = Exports
M = Imports
When you are making decisions on your option positions, it is
important to do appropriate analyses on those positions in addition to looking at economic indicators and doing your fundamental analysis on underlying equities and market direction. Determine fair value for your
options to make sure you don't pay too much for them. Don't
let your profits erode; make sure you get the right start.
It is also good to assess the actual probabilities of
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Here are links to other important economic indicators.
Related financial Sites:
Valuation of Company Options
Option Posting Service for Companies
Valuation of Employee Options
Forex Trading Resources
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