Stock options trading can be much profitable in comparison to regular stock trades and investments. While investing, it is always beneficial to have a good amount of knowledge about the type of investment and associated risks. You should be careful about certain things when investing in Options.If you do not have enough information about the [...]
I am sure many of you have heard of a sophisticated sounding strategy called the Butterfly. For some reason, it seems to be the darling strategy of many of those ‘teach-you in five hours’ type option companies. They publicize the ‘mystical magical Butterfly’ and the ’sophisticated Condor’ as if they were going to unlock the [...]
Professional traders use the term lean to refer to one’s perception about the directional strength of the stock. When you own a stock and intend to hold it for a period of time, you are aware that you will probably be holding it while it goes up and while it goes down.
This means that at [...]
Another protective strategy that allows for some upside capital gain while providing maximum down side protection is the collar.
The collar is a combination of the covered call and protective put strategies. The collar uses a long put position in coordination with a short call position along with a long stock position. The ratio is one [...]
Introducing the Amazing Stock Repair Strategy. This strategy involves buying one at-the-money call option while simultaneously selling two out-of-the-money call options on the same stock, in the same month.
The construction of this trade is critical. First, you must make sure to purchase exactly the equivalent amount of at-the-money call options as shares of stock you [...]
Like most trades, time spreads have a maximum loss for the buyer. As a buyer, you can only lose what you have spent. If you paid $1.00 for the spread then your maximum potential loss is that $1.00. If you bought the spread for $2.00, then $2.00 is the maximum potential loss.
The buyer of a [...]
Many traders and investors dream about making consistent profit on the stock market. Typically, investors would turn to fundamental analysis for medium to long term capital gains while traders would try to time the market using technical analysis to spot reversals or advantageous entry point and exit with the first sign of trouble. Unfortunately for [...]
Time decay, also known as theta, is defined as the rate by which an options value erodes into expiration. The value of the option over parity to the stock is called extrinsic value.
Since an option is a depreciating asset, meaning it has a limited life, the extrinsic value in the option will wither away daily [...]
Are you interested in option stock trading? Then you must be interested in option stock trading strategies. To understand stock options better lets see a simple dictionary definition.
Strategy can be defined as a skill in managing or planning, especially by using stratagems. The words managing or planning using stratagems to achieve a particular end or [...]
We are going to put together an imaginary spread scenario and set it in real life events. Consider that, in October, you begin to hear about IJK stock. It looks interesting, so you use a variety of sources to learn about it. (News, charts, outside analysts, Internet research, etc.) From your investigations, you decide that [...]