The Butterfly Payoff

What’s the right environment for the butterfly spread? While short straddles and strangles are great trades when investors want to speculate that a stock will not move much, the risk can seem too great. The long butterfly provides a potential alternative. A butterfly spread has low probability and low risk. That means there’s a low … Continued

Theta: Money for Nothing

Ready to make a profit just by letting time pass? With “theta,” it’s a distinct possibility magine making money just by letting time go by. Savings accounts accomplish that but they’re about as exciting and profitable as watching paint dry. Luckily, there’s another way, and it’s called “theta.”   Traditionally, the only way to try … Continued

The Short Put

The moving parts of a short put have scared off many investors. Let’s clear up misconceptions so traders can take advantage of the benefits

Going Long

You are bullish on a stock or sector. You see upside ahead. It’s important to understand the probabilities, risks, and costs of the various options.

Covered Strangles

A short strangle is a neutral strategy that profits when the stock stays between the short strikes as time passes, as well as whether there are any decreases in implied volatility. The short strangle is an undefined risk option strategy. Directional Assumption: Neutral Setup: Sell OTM Call Sell OTM Put Ideal Implied Volatility Environment: High … Continued