The Strangle

This trading strategy can add a short premium and an element of time to a portfolio Elegant in its simplicity, the strangle captures a range of possible price movement in the underlying. The strategy consists of a naked short call and a naked short put (both sold out-of-the-money and both sold for a credit). To … Continued

Volatility: Best Friend or Worst Enemy?

The VIX quantifies risk and fear: Check it to take the pulse of the market The VIX measures implied volatility, making it one of the most important metrics in options trading. It’s determined by the current price of options traded in the market. When volatility climbs higher, option prices are high. When volatility dips lower, … Continued

Understanding Delta

Delta can gauge a position’s directional bias and also do so much more Investors use “delta”—one of the most common terms in options trading—to describe risk in many different ways. Directional bias Delta can gauge a position’s directional bias. If, for example, the delta was +25, that would mean for every dollar up in XYZ … Continued

The Rolling Defense

Rolling a trade helps manage a winning or losing position When defending an options trade, investors often rely on a technique known as “rolling.” The process closes out the current position and moves it—or rolls it—to another strike. That can boost the credit received and increase the probability of success. Follow the guide below to … Continued