Options, by definition, are a wasting asset. Many first-time option investors learn this fact the hard way by watching their option contracts expire worthless.
Options
Long Option Strangles: Another Play on Potential Volatility
All too often I hear about traders missing “The Big Move” because they fear losing money in a volatile market. This is a very real fear and one to be respected. However, if the traders had known about long option strangles, they would have been able to participate with a known risk. This article will… Read more.
Spread Your Wings with a Butterfly Call Spread
A butterfly option spread is a multiple option position that involves the simultaneous purchase of calls or puts with the sale of calls or puts. The way the spread will be established will depend on how bullish or bearish one is on a market. The same rule applies with other option strategies; there is no… Read more.
Using Spreads to Sell Option Premium
This article was originally written by Jeff Coglianese on September 02, 2005. With the majority of options expiring worthless, many traders are interested in selling options. Options are a wasting asset. With no change in any of the underlying assumptions, an option will lose part of its value everyday until the option expires worthless. Time… Read more.
Why Trade Spread Options?
This article was originally published on June 17, 2005. Many traders are attracted to options on commodities. They typically prefer the limited risk–premium paid plus commission and fees–and unlimited profit potential features that are exclusive to buying long options outright. The problem with buying options outright, however, is that many traders buy out-of-the-money options because… Read more.
How to Use Options in a Volatile Market Climate
This article originally appeared in FutureSource’s Fast Break Newsletter on December 16, 2005. Today’s volatile markets offer many opportunities. Along with these opportunities come risks. The greater the volatility in a market, the bigger the risk. Many savvy investors are drawn to the options markets as a way to take advantage of large price swings… Read more.
An Option’s Delta: What Is It and What Does It Tell You?
Many traders have heard about an option’s delta, but they have no idea what it means or how they can implement it in their own trading strategy.
Credit Spreads: Collect Premium While Keeping Your Clothes On
Readers of this blog should be very familiar with option spreads. We have written in the past (Option Spreads Examined Further: Measured Ways to Play Your Market Hunch, Bear Put Spreads: An Alternative to Purchasing Puts, and Bull Call Spreads: An Alternative to Purchasing Calls) about the different ways traders can participate in leveraged markets… Read more.
Locking in Profit by Purchasing Options
One of the most common things you’ll hear a futures trader say is, “Make sure you lock in profits with stops!” One thing some traders don’t realize is that you can lock in profits with options as opposed to using just a stop loss order. This article will focus on how locking in profits is… Read more.
Using Covered Calls and Puts to Gain Trade Management Flexibility
A covered call/put is an option strategy used by traders who hold a long/short futures position and sell a call/put option on the same underlying futures.
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