Options

Introduction Options trading can be both exciting and nerve-wracking, especially for newcomers to the world of finance and investing. Options are a bit more complex than traditional investments like stocks, but they offer unique opportunities to implement strategies, generate income, and manage risk. In this comprehensive guide, we will walk you through the essential steps to get started with options trading, from learning the basics to developing a solid trading plan. Learning the Language of Options Before diving into options trading, it’s crucial to understand the fundamental concepts and terminology…

Introduction Options trading has long been seen as the wild west of financial markets, often overshadowed by the rapid rise of cryptocurrencies like Bitcoin. It’s a market filled with complexity, and the perception that the majority of options traders lose money has persisted for decades. While the actual failure rates might not be as high as the rumors suggest, it’s undeniable that many investors struggle with options trading. In this blog post, we will discuss five ways to avoid being a ‘dumb money’ options investor and improve your chances of…

In the kaleidoscopic world of stock and options trading, there are few phenomena that have garnered as much attention as the Zero Days to Expiry options, or 0DTEs. With their explosive growth in popularity – rocketing from 5% of SPX® options volume in 2016 to a staggering 50% this August, they’ve ignited imaginations and sparked widespread debate. The question on everyone’s lips: Is the dramatic surge in 0DTEs warping the very fabric of the markets? Let’s delve deep and separate the chaff from the grain. Understanding Gamma Hedging: Before we…

The investment landscape is evolving, with bonds now nearing a point where they might just outshine stocks. As we step into this new era, many investors are understandably looking for ways to boost their yield without substantially increasing their risk. If you are among this group, there’s an innovative strategy you might want to consider. Bonds: The New Attraction Many investors today are reveling in returns of 5% or even higher from their money-market funds or short-term government bonds. This is a pleasant shift, especially when you consider the 10-year…

Options are lauded for their versatility, offering investors a broad spectrum of tenors to express their viewpoints. From trading options that expire years into the future, like the SPX® options expiring in 2028, to the more recent phenomenon of zero days to expiration (0DTE), the landscape of options trading has evolved dramatically over time. A Brief History Lesson In 1973, an ambitious exchange began listing call options on a mere 16 stocks. Expirations were initially set quarterly, and as demand grew, monthly expirations became the norm. This meant same-day trading…

Introduction As the world keeps changing, the capital markets reflect this dynamic ebb and flow. In 2023, while the U.S. equity indexes have shown remarkable resilience, there’s an underlying truth that remains unshaken: “Buy protection when you can, not when you’re forced to.” As we step towards the close of 2023, it’s imperative to reevaluate your investment strategy, especially concerning index options. The Cost of Protection: Understanding the Basics In the world of options, the cost of protection is often overlooked when the markets are calm. The catch is that…

Options trading has become an increasingly popular investment avenue for both new and seasoned traders. The versatility and complexity of options provide a wide array of opportunities but can also pose certain challenges. This guide is designed to help traders at any level discover their next step in the options trading journey by breaking down the process into five manageable steps. Step 1: Get Started Understanding the basics of options trading is a fundamental starting point. Traders must acquaint themselves with the nature of options and how they can be…

As more investors turn to the versatile world of options trading, it is crucial to recognize the common mistakes that can erode profits and increase risks. This comprehensive guide aims to create awareness around seven common options trading mistakes, providing traders with the insight they need to make more informed decisions. Let’s delve into these pitfalls and the ways to avoid them: Mistake #1: Strategy Doesn’t Match Your Outlook Selecting a strategy that aligns with your outlook is a foundational step in options trading. Analyzing market action through technical analysis,…

Hope for the best. Prepare for the worst. This old adage seems to be the mantra for the options market as the S&P 500 index continues to pirouette precariously on the brink of record-high territory. The dance is as thrilling as it is nerve-wracking, mirroring the collective heartbeat of big investors who are keeping a wary eye on the market’s movements. Inflation, the invisible puppeteer pulling on the strings of the economy, appears to be cooling. This suggests that the Federal Reserve may take a step back from more aggressive…

As the adage goes, the only certainty in life is uncertainty. This has been brought to stark relief in recent events that have caught the world by surprise. To many investors, these events have highlighted the fact that we live in an increasingly unpredictable world, where seemingly unlikely scenarios can become reality, with potentially significant consequences for the global economy and financial markets. Consider the recent event where the mercenary Wagner Group seemed to be on the verge of staging a revolt against Vladimir Putin, one of the world’s most…