There are about 72 options trading strategies. The following infographic describes the top 10 options strategies: Covered Call, Protective Put, Long Call, Long Call Spread, Long Put, Long Put Spread, Long Straddle, Long Strangle, Collar and Iron Condor.
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 neutralstrategy in options tradingthat 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.
The Reverse Iron Condor (RIC) is a limited risk, limited profit trading strategy that is designed to earn a profit when the underlying stock price makes a sharp move in either direction. The RIC Spread is where you buy an Iron Condor Spread from someone who is betting on the underlying stock staying stagnant.
Netflix has earnings due out Monday, October 16th, after the market closes. Seven calendar days before then would be 10-9-2017. Coming off of a nice win in THO, now it's time to look at the company's remarkable history of momentum into earnings events and how it compares to FAANG more broadly.
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?