Recent Articles and Videos


Behavior of the Spread

Monday, November 19, 2007
Filed Under Intermediate Options Trading 

Time spreads can be a profitable investment strategy if you understand the concept of time decay. A time spread is designed to take advantage of the fact that an option’s decay curve is non-linear; that is, an option’s value does not decay evenly over time. As an option gets closer to expiration, its rate of…click to read more.

Time / Diagonal Spreads

Sunday, November 18, 2007
Filed Under Intermediate Options Trading 

Time Spreads Time Spreads, also known as Calendar Spreads, are an ideal way to take advantage of time decay and changes in implied volatility. The time spread strategy focuses on the movement of time and volatility more than on the movement of the stock. Therefore, this strategy is ideal for use when you anticipate either…click to read more.

Profit and loss chart showing how this Stock Repair Strategy works at different stock price levels The chart will show the stock price, the price of both the Feb. 30 and Feb 35 calls, the individual profit and losses of the stock and the options and finally a profit/loss of the entire position, assuming the…click to read more.

How the options react in three different scenarios: up, down, and stagnant. Let’s look at how the options will react in the three scenarios: up, down, and stagnant. Remember, we have entered this trade already down $5,000 from the stock purchase. If the stock continued to trade down, the option position would produce no additional…click to read more.

Introducing the Amazing Stock Repair Strategy. This strategy involves buying one at-the-money call option while simultaneously selling two out-of-the-money call options on the same stock, in the same month. The construction of this trade is critical. First, you must make sure to purchase exactly the equivalent amount of at-the-money call options as shares of stock…click to read more.

In today’s markets, everyone from amateurs to professionals alike experience losses sometimes. Since the bubble burst, investors have come to understand that managing losses is just as important as attaining profits. We have all found ourselves in situations where we have purchased stock that proceeded to trade down leaving us with a loss or a…click to read more.

Glossary

Saturday, November 10, 2007
Filed Under Intermediate Options Trading 

AT-THE-MONEY: An option whose strike price is equal to the current market price of the underlying stock. ASSIGN: To designate an option writer (seller) for fulfillment of his obligation to sell stock (call option writer) or buy stock (put option writer). The writer receives an assignment notice from the Options Clearing Corporation (OCC). CALL: An…click to read more.

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