Search
-
Recent Comments
Category Archives: Basic Trading Skills
Fish or Cut Bait
[responsivevoice_button rate=”0.9″ pitch=”0.5″ volume=”0.8″ voice=”US English Female” buttontext=”Play”] Previous posts covered single options and vertical spreads. We initiated a few trades and followed them on their paths to profit or loss. If you are reading this because you want to … Continue reading
Posted in Basic Trading Skills
Leave a comment
Living in the Past
[responsivevoice_button rate=”0.9″ pitch=”0.5″ volume=”0.8″ voice=”US English Female” buttontext=”Play”] I want to examine yesterday’s trade (PSTG bull put spread with strikes at 25 and 28). I was drawn to it because PSTG’s earnings report was published after the market closed on … Continue reading
Putting on a Different Kind of Option Contract
[responsivevoice_button rate=”0.9″ pitch=”0.5″ volume=”0.8″ voice=”US English Female” buttontext=”Play”] So far, our focus and example trades have involved call contracts. I’ve displayed my preference for vertical spreads over naked options, and the spreads we’ve looked at have been credit spreads, which … Continue reading
So You’re Telling me There’s a Chance
[responsivevoice_button rate=”0.9″ pitch=”0.5″ volume=”0.8″ voice=”US English Female” buttontext=”Play”] We might say that we got lucky on our SPY trades. But how lucky? Did we beat the odds? Or did the odds favor us? How can we tell? Can we explain … Continue reading
Shorts for a Summertime Trade
[responsivevoice_button rate=”0.9″ pitch=”0.5″ volume=”0.8″ voice=”US English Female” buttontext=”Play”] Last week we bought (that is, went long on) an ITM call. This week we’ll watch what happens when we go short on an OTM call. A trader who goes short on … Continue reading
Extrinsic Value: Nailing Jelly to a Wall
[responsivevoice_button rate=”0.9″ pitch=”0.5″ volume=”0.8″ voice=”US English Female” buttontext=”Play”] Keeping up with the value of an option can be challenging. You’ve got the intrinsic value, which changes as the stock’s market value changes, and you have extrinsic value, which at first … Continue reading
Telling the Future
[responsivevoice_button rate=”0.9″ pitch=”0.5″ volume=”0.8″ voice=”US English Female” buttontext=”Play”] Last week we tracked an imaginary ITM long call at a strike price of 170 with a DTE of 19 AUG 22. In trader shorthand we might identify the contract as .AAPL220819C170. … Continue reading
Posted in Basic Trading Skills, Option Pricing
Leave a comment
Calling All Traders
[responsivevoice_button rate=”0.9″ pitch=”0.5″ volume=”0.8″ voice=”US English Female” buttontext=”Play”] In option trading, a call is a type of contract. Traders can buy calls, which give them the right for a specified amount of time to buy stock at a specified price. … Continue reading
Posted in Basic Trading Skills, Trade Demonstration
2 Comments
Understand Stocks Before Buying Options
[responsivevoice_button rate=”0.9″ pitch=”0.5″ volume=”0.8″ voice=”US English Female” buttontext=”Play”] Options are a type of derivative. That is, their value derives from another financial instrument. If you buy an option on AAPL stock, for example, the value of the option depends primarily … Continue reading
Posted in Basic Trading Skills
Leave a comment