Options Trading

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…

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,…

Introduction: Options trading can be a versatile and potentially lucrative way to participate in the financial markets. One of the key strategies that experienced traders often employ is “rolling” options. This blog post will provide a comprehensive overview of rolling options, covering essential aspects that traders should know, including the meaning of rolling options, reasons for using this strategy, and specific examples of rolling different types of options. What does it mean to roll options? Rolling options is a strategy that involves closing an existing options position and simultaneously opening…

Rollover Options refer to the process of closing an existing options contract and opening a new one with a later expiration date while maintaining the same underlying asset and strike price. This strategy is typically used by options traders to extend the life of a trade that may require more time to become profitable or to manage risk in their options portfolio. How to use it: Monitor your existing options position: Keep an eye on the performance of your options contract, taking note of its time to expiration and any…

Introduction Options trading offers a unique way for investors to diversify their portfolios and potentially maximize profits. This blog post aims to introduce the concept of options, the reasons to invest in options, the advantages and disadvantages of options trading, how to get started with options, and common options strategies for beginners. We will also discuss what options can be used for, who can benefit from options trading, and provide a conclusion to tie everything together. What are Options? Options are financial contracts that give the buyer the right, but…