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Few Facts About Implied Volatility

The following infographic describes the facts about implied volatility, where does it come from and how to calculate implied volatility. Implied volatility is an estimated volatility of a security’s price. It is very helpful in calculating the probability and is used to adjust the risk control and trigger trades.

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.

How To Trade Risk Reversals

A risk reversal is a strategy that involves selling a put and buying a call with the same expiry month. This is also known as a bullish risk reversal. A bearish risk reversal would involve selling a call and buying a put. Today we’re going to examine the bullish risk reversal.

What Is The Best Options Strategy?

I'm often asked by novice options traders what is the best options strategy. The answer is that there is no such thing "the best options strategy". Each strategy has its pros and cons. Each strategy will work the best under certain market conditions, and no strategy will work under all market conditions.

Using Options To Hedge Investments

Options inherently have been met with much speculation, and anyone who trades them knows this. Many bankers and financial advisors steer clear of options because of their potential risk. Are they correct in doing so? I don't believe they are. Options when used correctly can provide better annual returns than a traditional buy and hold method.

Best Trading Articles 11/19/16

Reading as much as we can about trading always helps us to improve and become better traders. I'm pleased to share some of the best trading articles, podcasts and videos from some of my favorite traders, bloggers and educators. If you came across an interesting article please share it in the comments section.

Buy the Winners: the Power of Momentum

Momentum is a phenomenom that tends to leave academics scratching their heads as it shouldn't really exist in a world of perfectly efficient markets.  Yet for 100 years a simple rules based, quantitative approach would have provided the opportunity to earn increased returns with reduced volatility and drawdowns vs. a buy and hold approach.

Best Trading Articles 11/12/16

Reading as much as we can about trading always helps us to improve and become better traders. I'm pleased to share some of the best trading articles, podcasts and videos from some of my favorite traders, bloggers and educators. If you came across an interesting article please share it in the comments section.

Selling Straddles: Too Risky?

A question from a reader: "I sell straddles, usually 30-45 days prior to expiration on the SPX index at the current market price. What do you think is the best option strategy to offset large moves up/ down? Would buying a straight put (or a put spread) be best? It's an expensive route to take and just wondering if you have another solution?"

Options and Probabilities

The more I talk with traders, read articles and listen to commentators the more everyone seems to be talking about what is the “most probable”. Certainly we all like the thought of being on the right side of a trade and assessing probabilities can play a large part.

Best Trading Articles 11/05/16

Reading as much as we can about trading always helps us to improve and become better traders. I'm pleased to share some of the best trading articles, podcasts and videos from some of my favorite traders, bloggers and educators. If you came across an interesting article please share it in the comments section.

Should You Trade Weekly Options?

Weekly options, first introduced by CBOE in October 2005, are short term options as opposed to traditional options that have a life of months or years before expiration. Originally, new series for Weekly options were listed each Thursday and expire the following Friday. 

FANG Stocks Killed It. Again.

FANG, an acronym created by Jim Cramer a few years ago, is representative of four of the most popular and best-performing tech stocks in recent memory - Facebook (FB), Amazon (AMZN), Netflix (NFLX) and Google (GOOG). How those four stocks are relevant to us?