Have you ever been assigned in options trading? Many traders have gone through assignment at some point in their trading life, and it can be an uncomfortable feeling. Today's blog will be a refresher on the "ins and outs" of option assignment. Before I get into the specifics about assignment in options trading, it's … [Read more...] about Understanding Assignment in Options Trading
Iron Condors are a popular options trading strategy used by both professional and retail traders. Today we will cover the basic components of Iron Condors and how they work. There are many variations of Iron Condor strategies; we will discuss the traditional Iron Condor in this article. How an Iron Condor is constructed … [Read more...] about Introducing the Iron Condor
Volatility levels are widely used by traders when making a decision to enter or exit a position. Understanding the differences between the various metrics of volatility can help gauge option pricing, and can be essential in your efforts to be more consistently profitable in your trading. Implied Volatility Percentile (IVP) or Implied … [Read more...] about Give Yourself a Trading Edge … Use Implied Volatility, IV Percentile, and IV Rank
Today you will learn about the risk reversal. It can be used to protect or hedge your stock, position, or portfolio. A risk reversal can be useful to guard against a major market move. Risk reversals can also be used as a directional position. A risk reversal can be structured so you do not have to take on a lot of risk. A risk … [Read more...] about What is a Risk Reversal Strategy?
The broken wing butterfly (BWB) is an advanced strategy involving the use of multiple options. The butterfly strategy is generally thought of as a neutral to slightly directional strategy, which will often benefit when the market does not move too much in price. A Broken Wing Butterfly has long strikes which are not the same distance … [Read more...] about What is a Broken Wing Butterfly?
A calendar spread is a strategy often referred to as a time spread. A calendar is a method which could benefit from the time decay of an option and changes in implied volatility. For the most part a calendar concentrates on the movement of time and volatility more than the movement of the underlying asset. For this reason a calendar … [Read more...] about What is a Calendar Spread?
On July 21, 2018, an introductory article was published about trading the foreign exchange market (Forex, or FX). That article can be found here: Introduction to Forex Today we will continue this educational series with a bit of information to help those unfamiliar with the Forex market understand how the pricing works, as well as … [Read more...] about Forex 101: How to Understand Forex Pricing; and the Difference Between Currency Futures and Spot Forex
Diversifying your portfolio can help reduce some of the risks in trading, as well as help to maximize your returns. Most professional investment advisors will agree that while diversification certainly does not provide any guarantee to prevent losses, it can be a very important element in reaching longer-range income goals while … [Read more...] about Diversification; Why it is Important for Traders
Gamma, one of the options "Greeks", is often referred to as the Delta of the Delta. Gamma is the rate of change in the delta of an option per a one-point move in the underlying instrument. It is important for traders to understand the effect Gamma can have on their positions. As Gamma increases, it can dramatically affect a position in … [Read more...] about Gamma; How it Can Affect Your Options Positions
Because trends are composed of a series of price swings, momentum can play a key role in determining the strength of the trend. It is important to know when a trend may be slowing down, as it may be indicative of a reversal. How can a trader assess the strength of a trend? Using momentum, along with rate of change and momentum divergence, … [Read more...] about Momentum, Rate of Change, and Divergence … What They Mean to Traders