The basics of options trading

Most options trading starts with a directional guess: you think a stock goes up, so you buy calls. But some of the most reliable earnings strategies don't require you to be right about direction at all. They're built to profit from volatility itself — from how much a stock moves, or from the collapse of implied volatility after the report — while staying largely indifferent to which way it goes.

By krisbee, September 21

Here is a puzzle from our own earningsstudy charts. On Thursday, August 6, the ADBE one-week put calendar — the same 260 strike, the same September 11/18 expirations — was worth $1.425 at 3:46pm and $2.60 at the 4:00pm close. Nothing happened to the trade in those fourteen minutes.

By krisbee, September 8

The Cboe Options Exchange will start offering expanded trading hours for select high-liquidity single-stock equity options. The schedule features a morning Global Trading Hours (GTH) session from 7:30 a.m. to 9:25 a.m. ET and an afternoon Curb session from 4:00 p.m. to 4:15 p.m.

By Kim, August 16

LEAPS stands for Long-Term Equity Anticipation Security. Which is just a long-dated option, typically referring to those with expirations more than a year out. There’s no technical difference between LEAPS and shorter-term options other than the expiration date. They’re traded on the same exchanges and have the same rules surrounding margin and whatnot.

By Pat Crawley, August 16

In my previous article, I described a strategy of buying a long strangle a few days before earnings and selling them just before earnings. In this article, I will show why it might be not a good idea to keep those strangles through earnings.

By Kim, August 16

Every card in the scanner carries a block called How expensive is this entry? It compares what you would pay today against what the same setup cost on the same ticker at the same point in past cycles. I built that block in August. It reads well. But a reading that looks sensible and a reading that predicts something are different things, and until last week I had only the first.

By Romuald, August 15

A trader looks at a pre-earnings straddle and asks whether it is expensive. It is the right instinct and the wrong question, because the word carries no meaning on its own. Expensive against what? A $12 straddle on a $200 stock is not expensive or cheap. It is $12.

By Romuald, August 11

Options education almost always begins with structures. Traders learn vertical spreads, calendars, butterflies, condors, covered calls and straddles, study the expiration diagrams, work out maximum profit and loss, and build a sense of the conditions each structure is supposed to suit. That foundation is necessary and there is no way around it.

By Kim, July 25

Both SPX and SPY options give you exposure to the S&P 500. They track the same 500 stocks, move nearly tick-for-tick, and offer the same core strategies — credit spreads, iron condors, butterflies, and 0DTE trades. Yet the two products settle differently, are taxed differently, and carry very different assignment risks.

By krisbee, July 7

Loyal readers of this blog will recall my post from 2019 “Pinning Down the ‘Option Pinning’”. If you have not heard of pinning have a look at that article as – spoiler – everything in it as well as Jeff Augen’s observations in his books which are referenced is still valid.

By TrustyJules, July 6