Browsing all posts in Options Trading.
Meet the Greeks – Part 2
In this article, we move a little further down the track and look at how changes in other factors can affect an option. For any option trader, it is interesting information, but more importantly essential in understanding the risk in a position.
Meet the Greeks – Part 1
(Originally published in Active Trader magazine) What a boring game all this would be if option prices showed no fluctuations! The price, or premium, of an option is constantly changing for whatever reason. As an options trader you must be prepared, armed with the knowledge of how an option price can react in certain scenarios. [...]
The Best Options Strategy
Not long after options became available, there were the seminars and the books and the systems that come with any new financial product. There were all sorts of people touting what they see as the best strategy for making money. This article puts all that in perspective. Is there such a thing as ‘the best strategy’?
An Overview of the Option Markets (a jargon free zone)
Here is an article without a single peice of options jargon. Instead of coming from the ‘what are options?’ point of view, let’s consider why you should trade them or better still ‘what’s in it for you?’
Hedging with Index Options
The concept of hedging has always been a controversial one. This article looks at hedging options with the DAX.
Coffee Futures Outlook and Trading Strategies
With a more bullish fundamental setup for next year and a movement by fund traders and investors to own commodities and shy away from owning the US dollar, the coffee market appears poised to attract significant new buying interest in the months ahead.
FAQ: Futures, Options & Tropic Thunder II
Q: Aren’t options spreads cheaper to trade than futures spreads? A: This question is based on a misunderstanding of the mechanics of futures and options trading. Options: With options, including options on futures, you pay a “premium” when you buy an option and receive the premium when you sell an option. If you pay 10 [...]
Gold – tough market, but there is always an angle
$900 seems like a key level for Gold. The chart shows several points of resistance and support. Generally speaking the more a level is tested either as support or resistance, the most significant a breakaway becomes. Does this forecast near term direction? Not quite. But it does imply a breakaway within the next week or [...]
7 Rules for Selling Options
The concept of selling options to receive a premium is pretty straightforward but careful consideration must be given to choosing the strike and monitoring the position. While it is not recommended, a position with limited liability, such as buying options, can be left unmonitored if you are happy with the initial risk. However, a position [...]
Your Very Own Order Book
This is a sheet for writing out orders. Its design is very similar to that used by many brokers for recording phone orders from customers. It’s a handy little tool that is simply a good way to keep a record of when, and with whom, you placed an order and of all the trade details. [...]
Busted: the myth of option expiration
Popular belief: 80-90% of options expire worthless therefore it is better off being a net seller that a net buyer of options at any time. How many times have you read this? I know I have read or heard it dozens of times. “80% of options expire worthless therefore it is better to be an [...]
