A recent discussion on options was started when this question was asked:If I want to buy a PWER stock option with its high growth because I don’t have the money to buy it outright. What things in such a option should I look for and what should I avoid?

I was recently asked a question about option trading and the placing of stops. Although I answered that question right there and then, I felt that the topic of stop losses and options needed to be explained in more detail…

Time to expiration, price of the underlying, implied volatility, historical volatility, puts, calls, delta, gamma, theta, vega, in the money, at the money, out of the money, intrinsic value, extrinsic value, higher commissions, egregious bid ask spreads, no options traded on a stock with a beautiful technical set up, multiple potential beasts and physiologies, LEAPS; why would one even bother with options? If I retain a shred of rationality, an open question to be sure, there must be some reason to complicate my life with these additional variables.

I learned about one risk of buying LEAPS the hard way.LEAPS (Long-Term Equity Anticipation Securities) are options that expire in a year or more. That means they generally have a lot of time premium built into them.

Detailed Q&A on this fundamental and vital strategy

"Delta:" What does it mean and how do you use it?

Implied volatility is a major determinate of the magnitude of the extrinsic option premium. Considered together with time, these two factors act in concert to define the pricing of the time value (extrinsic value) of options.

A friend of mine in the futures pit had been having a rough time of late when he asked me a typical question among us traders ? How do I come back from a loss? Since he had been having a "rough patch" and not just one bad trade, I gave him the following advice that is to be used over a period of time…

Attention New York readers!! Mark will be moderating discussion at a High Frequency Trading forum on Wednesday, June 9.

Options offer a number of unique advantages to the trader, but perhaps the single most attractive characteristic is the ability to control risk precisely and to do so with surgical precision. Much of this advantage derives from the ability to control positions equivalent to stock with far less capital commitment.

In my most recent option class in Milwaukee, Wisconsin, I was asked a very specific question by one of the students. He was assigned on the sold option even though on the April's expiry Friday the position, technically speaking, should not have been assigned to him. He asked me the same question that he has asked his broker: "Why was I assigned?!?"

One of the questions that often comes up in many of my option classes when teaching the credit spread strategy is what to do with the short leg. This entire article will focus on providing a clear answer to that question, while covering all other relevant details.