Exploring five possible payoff scenarios for debit call spreads…

Often, I'm asked about complex three- and four-legged strategies such as backspreads, condors and ladders, and I'm happy to discuss them. However, sometimes investors get so wrapped up in exotic strategies that the more basic ones are overlooked. Many strategies, such as basic credit and debit spreads, can be less difficult to trade, and can often be effective at generating small profits, while also helping to manage risk. There are literally hundreds of different types of spreads, covering all sorts of different objectives, with different levels of risk and potential profitability

Exploring the impact of the short selling ban on put/call parity, bid/ask spreads and options pricing models.

We explore the truth behind the common phrase "triple witching hour." We also explore why options expire on the third Friday of the month and what happens when Holidays disturb the expiration calendar. Finally, we examine ways to predict when your short option positions will be assigned.

A number of readers and students have asked me to explain in detail how some of the volatility calculations are made. This week, I'll go through the steps of calculating historical volatility..

Examining "The Greeks" and P&L Graphs of the Incredible Ratio Spread…

Last week I discussed one of my favorite types of trades, the Backspread. This week, I'm going to talk about the other side of that trade, the Ratio Vertical Spread…

How to select the proper strike price and strategy to put your options to work…

How to put long and naked short puts to work for your portfolio…

How to put long calls and naked short calls to work for you…

In earlier articles on this site, we discussed the basics of options including terminology, rights and obligations, open interest, pricing, sentiment and expiration cycles. Now it's time to put some of this knowledge to work…

How to trade diagonal spreads with puts and how to use diagonal spreads as alternatives to covered calls…