SteadyOptions Trading Blog

What is Sell to Open vs Sell to Close? We look at these two similar, but not exactly the same, concepts. There are two ways to participate in the options market; you can either buy or sell. But you can also buy/sell to open or to close. Below we go through what these terms mean and which is the most appropriate.

The Reverse Iron Condor is an options spread opposite to the popular Iron Condor spread. The trade aims to profit from increases in volatility in either price direction while mitigating the risks of unlimited losses. The spread differs from other long-volatility spreads like the long straddle or long strangle in that its upside is capped.

The Sell Put And Buy Call Strategy is an example of a synthetic stock options strategy: using call and puts options to mimic the performance of a position, usually involving the purchase of a stock. We saw this when looking at the synthetic covered call strategy elsewhere.

Synthetic positions in options trading is the use of options and/or stocks in order to produce positions that are equivalent in payoff characteristics as another totally different position. So, can we to produce the payoff characteristics of one of the most popular options strategies, the Covered Call, without buying the underlying stock?

Options Vega is the measure of an option’s price sensitivity to changes in volatility. It is the expected change in options price with a 1 point change in implied volatility (positive if it rises/falls with a rise/fall in market price; negative otherwise).

A call option payoff depends on stock price: a long call is profitable above the breakeven point (strike price plus option premium). The opposite is the case for a short call. A call option payoff diagram shows the potential value of the call as a function of the price of the underlying asset usually, but not always, at option expiration.

We all know that earnings season can be a volatile time for stocks. But did you know that there are options strategies you can use to trade earnings announcements? In this post, we’ll discuss the five best options strategies for trading earnings announcements.

Volatility skewness, or just volatility skew, describes the difference between observed implied volatility with in-the-money, out-of-the-money, and at-the-money options with the same expiry date and underlying. It occurs due to market price action, itself caused by differences in supply and demand for options at different strike prices (with all other factors being equal).

A stock market crash occurs when there is a significant decline in stock prices. While there's no specific numeric definition of a stock market crash, the term usually applies to occasions in which the major stock market indexes lose more than 10% of their value in a relatively short time period. Preventing portfolio drawdowns is important for several reasons.

Just as there are two different types of options (puts and calls), so there are two main styles of options:  American options and European options. These options have many differences that are important. Many rookies have suffered unnecessary losses because they were unaware of the differences.

One negative aspect of option trading is that we frequently encounter wide bid/ask spreads. There are exceptions, but we have to anticipate seeing wide markets. That does not suggest it is always difficult to get orders filled at a decent price, but it does make it difficult to make a good estimate of your fill price.

Delta-neutral trading is a popular strategy among options traders who want to minimize directional risk and profit from Theta in the options market. However, there are some pitfalls associated with this approach that traders need to be aware of in order to avoid losing money. In this article, we will discuss some common pitfalls of delta-neutral trading and provide tips for avoiding them.