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?
Marko, from OptionSlam.com, is presenting the Double Eagle Trade on the Aeromir Round Table on Wednesday, 10 October 2018 at 11:00am Eastern. The Double Eagle Trade is a pre-earnings trading discipline with an excellent track record. We know you'll enjoy the presentation. Register for the webinar here Marko is teaching a workshop … [Read more...] about Marko from OptionSlam is presenting the Double Eagle Trade
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
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?
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?
Dan Harvey is a well known options trader who specialized in Iron Condor trading for many years. Dan had an article published about him in SFO magazine in 2008. Over time, Dan noticed several problems with Iron Condors so he modified them to address their shortcomings. The new version was a weird looking Iron Condor so Dan called it … [Read more...] about The Reverse Harvey