Options CenterOptions Trade Idea of the Week Index Options Here's a way to profit from a rebound in financials without having to pick a single company or nail the timing... -- KMX Strangle This position presented as expensive on a relative basis. A trader might have taken advantage in a couple of ways, depending on their risk tolerance... -- RMBS Straddle
Cheap on a relative basis, this straddle would have easily exploited the likelihood that the stock would not stay where was, regardless of which way it moved...
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Options Education The Place to Start Basic Trading provides a brief introduction to some very fundamental concepts relevant to trading. If you are brand new to trading and to options, this section is a good place to start... Option Anatomy provides a clear, concise explanation of what an equity option contract is and the components of which it is comprised. We talk about the rights granted to the option buyer and the obligations of the option seller. We also cover the typical jargon such as "in-the-money", "at-the-money" and "out-of-the-money"... Option Behavior explains how implied volatility, time decay, and changes in the underlying stock price cause intrinsic value and time value to change.
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What Are Options
It sounds like a simple enough question, and it certainly deserves a clear answer. Read on to see how options allow us to extract stocks' elements of risk and reward and deal with them separately...more -- Position Building in extreme volatiliy - Part 4 The market has been on a wilde ride, creating some interesting opportunities in options and all the while showing the limited downside risk even when the market plunges...more --
Short Calendar Spread
This is a trade ideally suited for fast-rising markets such as a technical bounce after a sharp sell-off...more --
Build A Structured Product
A structured product is an investment that combines desirable traits of different asset classes, such as bonds and stocks, into a single investment instrument. The result is an investment that cannot lose but can win. An individual investor can build his or her own structured product with a little know-how...more
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Options Ed Continued - Getting to the Good Stuff... Decision Making - Option trading is about cost and compensation for changing levels of risk. When speaking about cost and compensation for risk, there are three primary variables that apply... Greeks - Delta, Gamma, Theta, and Vega. Don't be put off by the arcane labels, these are valuable tools in the options business... Spreads - When you combine two or more different option contracts to create a desired risk profile, you have created an option spread. Here we discuss four types of spreads: 1. Vertical Spreads 2. Time Spreads 3. Straddles & Strangles 4. Diagonal Spreads In and Out - This column explains the alternative methods for exiting long and short option positions... Synthetics - With synthetics, one can consider the combination of options and stock that most efficiently (i.e., economically) creates the desired P&L profile. Perhaps more important than efficiency is the fact that synthetics open your eyes to powerful trading alternatives. You can create an investment that matches your market outlook and risk tolerance precisely... Position Building - Part 3
The calendar spread in our sample SPY position has lost value, but we're still in good shape as far as preserving capital and positioning for the profit opportunity...more --
Position Building - Part 2, The Framework
We continue the series on building a position, using a bell curve to facilitate good decisions at appropriate times...more --
Position Building - Part 1
The first in a series of columns on building an options-only position with capital preservation as the top priority and material profits as the second priority...more
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