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.
Straddle Options Definition An options straddle strategy is buying (or selling) both a put and call option with the same strike price and expiration date for the same underlying asset, and paying both the put and call premiums.
I am struggling with making the decision to get started. How much money do I need to be efficient and effective following your instructions? What software and where to find it? I could really benefit from extra income but I am also in a position where I can't really afford to lose much so there is some doubt/fear. But, your information and attitude felt right to me so I reached out.
Investing in the stock market can be a daunting task for even the most experienced investors. With the constant fluctuations and volatility of the market, it can be difficult to predict the future direction of the market. This is where options trading comes into play.
Long before Silicon Valley Bank failed, the banking sector was experiencing a silent bank run. Unlike the Great Depression, where lines of people clamoring for their money were blocks long, this silent bank run, as its name portends, has been out of sight until recently. There are a couple of reasons for this.
A lot of options traders consider a 90% probability strategy a Holy Grail of trading. After all, if you can win 90% of the time, you should be able to grow your account very quickly, right? Well, not only this is not necessarily true, but in fact, a Winning Ratio alone tells you nothing about your chances to be profitable.
Options can be as elementary or complex as you’d like them to be. For some, it’s as simple as buying a put when bearish and a call when you’re bullish. Others create sophisticated market-making models using advanced mathematics.
OptionNET Explorer (ONE) is a complete options trading, backtesting and analysis software platform that enables the user to backtest complex options trading strategies, analyze their results and monitor them in real-time, all from within a single, user friendly environment.
