Covered calls are an income strategy for options traders and investors to earn money on stocks they plan to hold over the duration of a short-call option contract. This option play is created when an out-of-the-money call is sold on a current stock position. The trader collects the premium for the contract sold and will […]
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Options trading can be a powerful tool for investors looking to hedge their positions, generate income, or speculate on the direction of a stock or index. With the ability to purchase a contract for the right to buy or sell an underlying asset at a predetermined price and time, options offer a flexible way to
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Options are a market of derivatives that gives traders and investors the right but not the obligation to buy or sell shares of stock over a time period at a strike price before an expiration date for the cost of the option contract. The options market is a zero-sum game where there is a buyer
Options Trading for Rookies (Understand Options Completely) Read More »
With options trading, brokers quantify different levels of risk exposure for different types of option plays and traders must be approved for each level. The level is based on the risk that the broker is exposed to with potential open ended unhedged short options. The option trader must have a correspondent hedge to limit the
Option Trading in 4 Levels of Complexity Explained Read More »
The options market presents both great opportunities for gains but also the potential for the risks of losses. Here are ten things that I learned quickly through experience that all new traders should understand before they start trading options. 1. Short options have unlimited risk when they have no hedge. It’s important to understand the
Options Trading Tips: Ten Things I Wish I Knew Before I Started Trading Options Read More »
Option contracts represent a bet on the directional price movement of an underlying stock in a defined time period. Option contracts represent 100 shares of a stock and are written on time frames of weekly, monthly, and yearly. The price of an option contract is based on the probability of it being in-the-money at expiration.
Call Options & Put Options Explained Read More »
When implied volatility for options pricing is high it is usually the best risk/reward ratio to look at selling option premium with strategies like iron condors, credit spreads and short strangles. When implied volatility falls the price of options can drop quickly creating profits for short volatility option plays. Should I buy options when volatility
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Gamma is the measurement of the rate of change of the delta. Gamma In Options Explained Gamma is the Greek that shows how delta will change with the underlier’s price moves. It is the rate of change of an option’s delta based on a $1.00 move in price of the underlier. Gamma describes how much
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Here is a list of the best options trading books based on Amazon sales, reviews, ratings and author popularity. It is important to have a full understanding of the options market and pricing model before diving into options trading with real money. Options are derivative contracts and complex instruments where time, strike price, and volatility are
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What is IV in Options? In Black–Scholes option pricing model, the implied volatility or IV of an option contract is the cost embedded in the option of the volatility of the underlying instrument that it is being valued against. Volatility is the input in an option pricing model that measures when an asset will likely
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