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How Time Decay in Options Works
Time decay in options, also called “Theta”, is the measurement of how much the value of an option will lose or gain each day as it gets closer to expiration. Time decay is not linear – the theoretical rate of decay accelerates as the option gets closer to expiration. The best way to explain time decay is using an example.
What is the Choppiness Index and How Can You Use It?
The Choppiness Index can be used to evaluate the extent of a trend, and when a trend may be getting ready to end or show indications of consolidation.
Technical Indicators 101: Relative Strength Index (RSI)
The RSI is considered to be a leading indicator similar to Stochastics and Williams %R, and generally, precedes price movement in the underlying. RSI is a popular indicator used by many traders to identify potential buy and sell signals, confirming trends, and indicative of possible trend reversals.
What's the difference between SPX and SPY Options?
Joanna covers the similarities and differences are between SPX and SPY options.
Round Table with Brian Johnson – Hedging Income Option Trades
Noted author Brian Johnson from Trader Edge is joining Capital Discussions on the Round Table on Wednesday 19 April at 11:00 am Eastern Time. Brian will present “Hedging Income Option Trades.”
Technical Indicators 101: The William %R Oscillator
The Williams %R is similar to the Stochastic oscillator is a momentum indicator and is used to estimate if a market is oversold or overbought. The indicator is also used to note divergence of momentum from the price of the underlying.
What is a Diagonal Spread or Time Spread?
A diagonal spread, also known as a time spread, may be a strategy you would like to implement into to your trading arsenal. Today we will discuss how a diagonal spread is created. We will also discuss some of the advantages and disadvantages of a diagonal spread.
A diagonal spread is a strategy which occurs when two options are bought or sold. These two options use the same instrument. These two options are of the same type, either two calls or two puts. The two options are at different strike prices, as well as two different cycles of expiration.
Technical Indicators 101 – The Stochastic Oscillator Part I
The Stochastic Oscillator was developed by George C. Lane in the 1950's. It is a momentum indicator that shows the location of the underlying's close relative to its range of the highs/lows over a set number of periods. This indicator follows the speed or the momentum...
Technical Indicators 101 – An Overview
This week's article will be an overview of what is a broad subject; technical indicators. Subsequent articles will cover some of the more popular indicators in detail, but we will cover the basics to start. Many traders use technical indicators to some degree to help...
Death Cross and Golden Cross Signals – What are they?
Have you heard of the Death Cross and the Golden Cross in your trading career? These two crosses occur when the 50-period simple moving average crosses through the 200 simple moving average. Read on and we will explore these two terms in trading. First we must review...