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Post Earnings Option Trade in Facebook

For Facebook Inc, irrespective of whether the earnings move was up or down, if we waited one-day, and then sold an one-week at out of the money iron condor (using weekly options), the results were quite strong. This trade opens two calendar after earnings to try to let the stock find equilibrium after the earnings announcement. 

The Incredible Option Trade in VXX

The iPath S&P 500 VIX Short Term Futures TM ETN (NYSEARCA:VXX) is referred to as "the VXX.". The obligation of the VXX is to match the performance of the S&P 500 VIX Short-Term Futures Index Total Return and that is a strategy index which maintains positions in the front two-month Volatility Index (VIX) futures contracts. 

The Art of Trading Decisions

One of my basic tenets in teaching people how to trade options is that rules and guidelines should not be written in stone and that there are valid reasons for accepting or rejecting some of them. When I offer a rationale or explanation or suggest course of action, it is because I have found that this specific suggestion has worked best for me.

3 Reasons to Own PG for the Next 50 Years

Large-cap, blue-chip companies are not exactly the hottest commodities on the current market. But one of them has been rewarding income investors for decades and will likely continue to do so. I’m talking about Procter & Gamble Co (NYSE:PG), a multinational consumer goods company headquartered in Cincinnati, Ohio.

Option Trade After Earnings in AutoZone

AutoZone Inc (NYSE:AZO) has earnings due out tomorrow, 9-19-2017 before the market opens and we can look at a slightly advanced option trade that starts two calendar days after AZO earnings (9-21-2017) and lasts for the 19 calendar days to follow, that has been a winner for the last 3 years. 

Early Exercise: Call Options

How would a trader like you decide to do early exercise? Say you bought calls when they were trading in the 1.0 -> 2.5 range, now underlying has risen so that calls trade bid-ask at 4.0 / 4.8 and there is strong possibility of it going higher. Also assume in another case that they trade in the 6.0 to 7.0 range.

The Power of Selling Options on Futures

It’s no secret that selling far out of the money options, as opposed to buying them, is a trading strategy with a high probability of success. Low-delta options have a proclivity to expire worthless. The dramatic downward moves required to make low-delta options profitable don’t happen all of the time.

How to Avoid Emotional Mistakes in Trading

There are some psychological dangers in the market that you should know about. It is important that you know how to deal with your emotions and what steps you must take to achieve your investment goals. Therefore, you must equip yourself with the right tools to be able to implement your operations in a profitable way in the long run.

What Is Volatility Skew

'Volatility skew' is one of those topics that many traders ignore.  It's not something that was understood in the early days (1973 +), when options began trading on an exchange. According to Wikipedia: "equity options traded in American markets did not show a volatility smile before the crash of 1987, but began showing one afterward."

Can Options Assignment Cause Margin Call?

I've had three emails in the past month on people being assigned on positions and receiving margin calls, and generally not knowing what happened. I advise everyone to completely research and become familiar with the exercise/assignment aspect of option trading. If you don't you can find your entire account blown out over a weekend.

Calculating ROI on Credit Spreads

The trigger to this article was a discussion I had with someone on Reddit. There is a common misconception about calculating gains on trades that require margin, like credit spreads and short options (naked puts/calls, strangles or straddles). I believe it is important to explain how to do it properly.

Should You Leg Into Iron Condor?

The wings of an iron condor options trading strategy consist of two vertical credit spreads; i.e., a bull put spread and a bear call spread. The process of "Legging In" offers the promise of higher yields and enhanced probabilities of options trade success, but the question is whether it is worth the risk.