SteadyOptions Trading Blog

When taking an options position, there will be risk and potential reward. Options Greeks measure the different factors that affect the risk and the reward of the option position. The following infographic provided a brief explanation of the most important Greeks: theta, delta, gamma vega and rho and their impact on prices.

The mysterious volatility trader known as "50 Cent" has lost $197 million in 2017 betting on a spike in the VIX, which would accompany a stock market shock. 50 Cent is starting to slow down, deploying roughly 20% of the contracts he had outstanding over the summer. This story has been published in Business Insider.

"Investors should be indifferent to $1 in the form of a dividend (causing the stock’s price to drop by $1) or $1 received by selling shares. This must be true, unless you believe that $1 is not worth $1. This theorem has not been challenged since—except by those bitten by the “dividend bug.”

Here’s a fun thought experiment. Suppose you had $15,000 to invest evenly in fifteen different companies back before the Great Recession. Then you let it ride through the market’s downturn, holding your investment instead of selling anything. How much would you have today?

One of the most common criticisms of any kind of investing is that it can be viewed as being akin to gambling. There’s nothing wrong with this given that investing in various forms is a perfectly legal and regular activity. 

One of the interesting features about options is that there is a relationship between calls, puts, and the underlying stock. And because of that relationship, some option positions are equivalent – that means identical profit/loss profiles – to others.

For those not familiar with the long straddle option strategy, it is a neutral strategy in options trading that involves the simultaneously buying of a put and a call on the same underlying, strike and expiration. The trade has a limited risk (which is the debit paid for the trade) and unlimited profit potential. 

We last wrote about Oracle on 2017-09-03 with this same back-test -- a 3-day momentum swing trade ahead of earnings and it has followed through for 8 consecutive pre-earnings cycles with a 290% total return during that historical period. Oracle's next earnings date is 12-14-2017, but this not is not yet confirmed. 

Netflix (NASDAQ:NFLX) has earnings due out Monday, October 16th, after the market closes. Seven calendar days before then would be 10-9-2017. It is time to look at the company's remarkable history of momentum into earnings events and how we can use it with options trade. 

This question is not related exclusively to options, but, given the time decay element built into them, it may be particularly relevant to them.The question is this: are there any general rules that you use for exiting trades that start to go against you, especially if they are not based on an anticipation of a specific catalyst?

Microsoft has earnings due out on October 26th, 2017, after the market close, according to Wall Street Horizon. 7-days before then would be October 19th, 2017. Microsoft is the forgotten mega tech -- the third largest company in the world behind Apple and Alphabet, but it doesn't fall into any fun Acronyms, like FANG, or FAANG. 

Options Greeks measure the different factors that affect the price of an option contract. Unfortunately, many traders do not know how to read the Greeks when trading. The following infographic will explain options pricing factors and the Options Greeks: theta, delta, gamma vega and rho.