Intrinsic and extrinsic option values are two components of an option chain which can be very important to an options trader. Knowing the intrinsic and extrinsic option values can help you as an options trader choose a good option candidate with its’ corresponding strike price and expiration. This can be a key factor in laying a … [Read more...] about What Are Intrinsic and Extrinsic Option Values?
In February, 2011, CBOE introduced the S & P 500 SKEW Index, as another means for investors to gauge market volatility and the potential risk of a "black swan" type of event. The SKEW Index is an option-based indicator that measures the perceived tail risk of the distribution of S & P 500 returns in the next 30 days. "Tail risk" … [Read more...] about What does the SKEW Index Mean to Options Traders?
Many investors consider the foreign exchange market (also referred to as Forex or FX) to be one of the most intriguing and exciting markets in the world. The foreign currency market is an extensive subject; and too vast to cover in one article. Today we will cover the basic elements of the Forex, and some important considerations for … [Read more...] about Forex 101: Some Basics on Understanding the Foreign Currency Market
Exchange Traded Funds (ETFs) are funds that track indexes such as the S&P 500, Nasdaq 100, Dow Jones Industrial Average, Russell 2000, etc. When an investor buys shares of an ETF, they are actually buying shares of a portfolio that tracks the yield and return of the related index. By purchasing an ETF, investors get the … [Read more...] about Inverse ETFs; Are They for You? Understanding the Plus’s and Minus’s
The ratio backspread is a strategy used by traders to create a position with a limited loss and varying degrees of profit. If the trade goes against you and the position is setup correctly, it can help guard against a large loss. This can be useful, especially when there is major news or a “black swan” event. The ratio backspread can … [Read more...] about What is a Bull Call Ratio Backspread Option Strategy?
Those new to options trading may not fully understand the different prices quoted on options contracts. Today we will discuss the basic prices which can appear in the option chain for an option: bid, ask, mark, and last. I will outline each price, as well as what the bid/ask spread means for options traders. Below is an example showing … [Read more...] about Bid/Ask and “Spread” Prices … How They Can Affect Your Options Trading