Can These Two Trading Strategies Really Predict a Stock’s Direction?
Momentum and insider activity are anomalies that defy the efficient market hypothesis—a theory that says you can’t win big
Can These Two Trading Strategies Really Predict a Stock’s Direction?
Options Trading: Why Some ‘Greeks’ Matter More Than Others
The Greeks provide investors and traders with insight on given options positions’ response to potential scenarios in the underlying stock, but some are arguably more important than others.
Why Rho Matters When Interest Rates are Moving
Rho measures the sensitivity of an option’s value to changes in interest rates and is in the spotlight because of the Federal Reserve’s aggressive plan to raise rates.
Scaling up Options Trades
Trading bigger doesn’t always mean more contracts. There are ways investors and traders can increase exposure without dramatically increasing tail risk. At some point, most options traders consider scaling into larger positions. Ultimately, the decision to do so depends on one’s market outlook, risk profile and strategic trading approach. But scaling doesn’t necessarily mean more … Continued
Delta Values
Traders can take advantage of the key to estimating that an option will expire in-the-money New traders often think they’re drowning in information when they open their first options chain. Dealing with puts and calls, dozens of strike prices and numerous expiration dates can feel like shopping for a jar of spaghetti sauce in a … Continued
Options Trading and the Role of Theta
Understanding theta’s role in options trading is nearly as important as mastery of implied volatility and delta. Theta, the “Greek” that measures the rate of change in an option’s theoretical value relative to the passage of time, is often referred to as “time decay” because options lose value as they get closer to expiration. For … Continued
Acquiring Short Delta
Delta can be either static or dynamic. Here’s how to get either one. Acquiring short delta means adding positions that benefit from a move to the downside. Keep this cheat sheet as a reference for strategies. Delta can be either static or dynamic. To generate static short delta, sell stock or sell a future. Regardless … Continued
Delta Force
Choose from the many ways to add positive delta to a portfolio A contrarian strategy suggests buying into weakness and selling into strength. From that standpoint, the market currently resides in the territory of buying into weakness. To take that approach, know the ways to get long on an underlying. That can also be called … Continued
Volatility and the Greeks
The last time the markets moved with this much pace was the 2008-2009 Financial Crisis, which occurred not long after the introduction of the first iPhone. That means many investors and traders active in the current environment have never before observed, or dealt with, such dynamic markets. In some ways, less-experienced traders possess advantages in … 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