How is an Option Similar to an Insurance Policy?

How is an Option Similar to an Insurance Policy?

Comparing an option to an insurance policy can many times help to simplify your learning curve when it comes to options. What is an option? “An option is a financial derivative that represents a contract sold by one party (option writer) to another party (option...
Can Price Action Enhance Your Trading?

Can Price Action Enhance Your Trading?

Price action trading can be defined in many different ways. For the purposes of this article, Price Action Trading is defined as a move in price either up or down on any and all charts in any market. You can use price action trading to scalp or swing trade. Price...
Why is Diversification Important for Your Trading Business?

Why is Diversification Important for Your Trading Business?

Let's say you have a fondness for organic, fresh juices, and you decide to open your own juice bar in the center of town. You secure reliable vendors for high-quality ingredients, purchase an industrial juicer, and open for business. Your juice bar is attractively...
Trading Options Around Earnings Releases, Part II

Trading Options Around Earnings Releases, Part II

“We are programmed to receive. You can check out any time you like, but you can never leave!” Hotel California, The Eagles In my last blog post, I discussed the nuances of change in implied volatility (IV) leading up to earnings release and following the...
Trading Options Around Earnings Releases, Part I

Trading Options Around Earnings Releases, Part I

One of the advantages of an option based approach to trading is the ability to capitalize on trades that have a statistically well-defined high probability of profit. When events occur with predictable regularity, the knowledgeable option trader can effectively...
The VIX: What Is It, and What Can It Mean for Your Options Trading?

The VIX: What Is It, and What Can It Mean for Your Options Trading?

What is the VIX? "The VIX Index is an up-to-the-minute market estimate of implied (expected) volatility that is calculated by using the midpoint of real-time S&P 500 Index (SPX) option bid/ask quotes. More specifically, the VIX Index is intended to provide an...