Options

Options Trading: Using Covered Calls To Increase Yield

When starting out with options, a natural place to begin is with covered calls. It’s a very easy to understand strategy for those that are familiar with stock ownership. The strategy involves buying a stock (if you don’t already own it) in lots of 100 shares. The total size will…

How To Increase Your Probability of Success Trading Options

Put 75%+ Odds In Your Favor – How To Increase Your Probability of Success Trading Options One of the biggest challenges newer traders face is finding a style that “feels right.” For many traders, the process can take a while to sort out and seem discouraging at times. A common progression…

Market Masters: How To Manage An Iron Condor Trade

For many professional option traders, iron condors form the basis of how they generate monthly income. Iron condors are a strategy that allows you to profit from sideways moving stocks, but they can also profit if the stock experiences slightly higher or slightly lower prices over the course of the…

Options Trading Education: The Year In Review

This year in the stock market has been all about The Great Rally of 2013. It’s been seemingly unstoppable with no meaningful corrections or downturns along the way. What this did to option premiums was crush them like a bug. That is normal in trending markets and especially so in…

Options Education: The Basics of Exercise and Assignment

Every now again I think it fitting and proper to review some of the basic elements in options working method. Today I am going to give a review on what happens when an in the money option turns into the underlying asset, long or short (i.e. bought or sold) through…

Options Strategies For A Broken Stock Trade

Sometimes bad things happen to good stocks. And when this happens, good stock trades can quickly become broken stock trades. Just like a rising tide lifts all boats, when the tide goes out, the boats go lower. Massive market sell-offs show no mercy, are not selective, and take no prisoners….

Using a VIX Call Spread as a Downside Hedge

I would like to discuss today another way to hedge your equity portfolio against a major move lower, albeit perhaps indirectly. And we can do this by using options on the CBOE Options Volatility Index (VIX), namely a vertical VIX call spread. The VIX is an index which provides a…

Options Education: The Butterfly Options Strategy

One of the more difficult aspects of writing a column such as this one is that I have little or no idea of the relative sophistication of my readers. Do most of them have an in depth knowledge of options? Or, is most knowledge rudimentary puts and calls? I hate…