Options Trading 101: Using Iron Condors in Rangebound Markets
Iron condors perform optimally when the underlying stock or ETF trades in a specific range, which is why they are often used in rangebound markets
Options Trading 101: Using Iron Condors in Rangebound Markets
Traders Should Know Their Options
Gamblers eventually lose to the house, but investors can come out ahead in the markets The house always wins. This cautionary quote is certainly true but doesn’t tell the entire story. From table limits to payout odds, every game in a casino is designed to give the house a statistical edge. The casino may take … Continued
Using Options to Estimate a Stock’s Expected Move
“Expected Move” refers to the market’s expectation for future movement in a given underlying, and this simple calculation can be used by market participants to analyze new trading ideas for the portfolio.
Legs, Wings and Tactical Risk Management
When an existing stock or options position is risk-adjusted, the new element of the position is often referred to as a “leg” or a “wing.”
Adjusting Duration in High Volatility Markets
After the conclusion of the current “Coronacrisis,” market participants may look back and realize that an important line has been drawn in the sand: 80. Eighty is notable because the VIX, also known as the “fear gauge,” has only closed trading above that number three times in its history—the previous Financial Crisis (2008-2009) and the … Continued
Trading Defensively: Managing Tested Positions
With the spread of the novel coronavirus outside of China, the entire world is now wrestling with a very serious threat. Furthermore, many investors are grappling not only with ensuring that they stay healthy, but that their positions—many of which are now being “tested” by the global economy’s response to the pandemic—stay healthy too. As … Continued
The Implied Volatility-Realized Volatility Spread
With equity markets currently in melt-up mode and the VIX dragging near historical lows, there haven’t been a myriad of great opportunities to sell options premium. However, while the VIX may not be flashing “sell” when it comes to short volatility, options traders have the ability to filter for potential opportunities using another tactic—namely, the … Continued
False Prophets
The financial industry is ripe with personalities claiming to be experts on the financial markets. These individuals, or groups, spout their buy and sell opinions on securities, sectors, or geographic areas as if they’re coming from the mouth of God himself. Conveniently, an accounting of such advice rarely occurs. And oftentimes, when such picks are … Continued
Short Volatility
One of the paramount goals when trading the financial markets is to maximize potential gains. Secondarily, most traders would likely prefer to minimize risk. If you are trading short premium, there are a couple simple guidelines to follow which can arguably help with both. These include the application of a trade management system; in tandem … Continued
Mean Reversion and Optimal Trade Entry
With equity markets in correction mode at the start of October, current market conditions are opening up plenty of new opportunities on the short side of the volatility coin. And if you want to learn more about the potential of short volatility, or rather the power of falling implied volatility, then a new episode of … Continued