I am often asked by my option students how I filter the overwhelming amount of information which gets displayed on the option chain. This article is aimed at explaining the importance of a handful of selected variables that appear at the option chain.
In one of my previous newsletters, I addressed the issue of the intrinsic value of option premium as well as the extrinsic (Time) component of it. However, no matter how obvious and self-evident those concepts appear to me, to my students, they seem to be extremely confusing…
In one of my previous newsletters, I addressed the issue of the intrinsic value of option premium as well as the extrinsic (Time) component of it. However, no matter how obvious and self-evident those concepts appear to me, to my students, they seem to be extremely confusing…
Horizontal Spreads, also known as either Calendar Spreads or Time spreads, are currently one of my favorite strategies to trade. It is my humble belief that during this summer, the U.S. stock market isn't going to do much of anything. The market might go a bit down and up but overall, at the end of the summer, it will seem as if it did not go anywhere significantly…
In my last article, I had utilized the Quarterly options for my Iron Condor trade and in this one, I will still stay on the topic of the Quarterlies. It is my humble conviction that the Quarterly options are under-utilized by option traders. The reason for my belief could be verified by looking at any of the open interest (O.I.) and volumes on the individual strike prices of either the calls or puts…
After the publication of my previous article, I have received some emails from our readers asking for a specific example. Some even said that the article was incomplete without the example, for I have provided the readers only with a template for an I.C. At any rate, I will oblige the readers' request, as I usually do, and present a current I.C. trade that I am in…
With the summer Doldrums in full effect, we take a look at moving averages, Iron Condors and the outlook for the market going forward…
In this article I argue that naked put selling, when the volatility is at extreme levels, would provide the seller with a "juicy" premium. At the same time the exposure would be technically unlimited (though the price could only go down to zero) while the reward would be limited to the premium received. Nonetheless, the safer way of trading would be by using spread trading or the simultaneous selling and buying of option premium.
Continuing our analysis of a reader's Bull Put trade. What went right and what went wrong? Read on to find out…
Examining what went wright, and what went wrong, in a reader's bull put trade.
This article is named Plan the Exit(s) Beforehand for the simple reason that there should always be more than one possible exit strategy for every single option trade that we make. Since the stock market on any given day could move in three possible directions (up, down, or sideways), we must have multiple exit strategies for our option trades…
The goal of this article is to point out that it is of utmost importance to be familiar with the product on which we are trading options. At any given time we should be aware of many factors which come into play when trading options, such as earning releases, dividends, implied volatility, and also technical analysis which determines the proper timing for both entries and exits.