Options Trading

gamma

A couple of months ago we made the point that, although high-priced stocks tend to make their options similarly expensive, the cost may be worth it. Those stocks -- we used Tesla (TSLA) as our guinea pig -- tend to move in big steps. Since their deltas are just as strong as any other option, the proverbial bang you get for your buck is adequate. The high cost can be abated simply by trading fewer contracts. Gamma doesn't make a big difference.... at least in that case. When you want to trade a lower-priced stock though, and the options don't cost quite as much, this is where gamma can make a big difference -- particularly if there's not much time left until the option's expiration. It was a matter that came up Wednesday, when our Weekly Options Accelerator trading service stepped into some near-term MGM Resorts (MGM) calls in anticipation… more


040517-gld-pl

Ever wonder how a bear call credit spread works, or for that matter, wonder what a spread is? Don't worry – it's not as complicated as it may seem. A spread is simply a two-option trade. One of the options is intended to drive the profits of a particular expected move from a stock or an index, while the other... more

target-3

One of the toughest parts about being new (or even a veteran) to the world of options trading is picking the right one. There are an overwhelming number of choices, in terms of strike prices and expiration dates, and each one of those options has a unique risk/reward profile. It doesn't have to be as difficult as it seems, though.... more

033017-amzn

A little over a month ago, we made the case for trading options on expensive stocks; Tesla (TSLA) served as the poster child. While that wasn't an official trade at the time, another pricy stock has since been the underlying instrument of a very successful trade, underscoring our point being made at the time. Subscribers to our new FANG (Facebook,... more

032417-yum

On Thursday, the BigTrends Daily Scans service — as usual — delivered its top trading prospects for the day to the service's subscribers. All 18 possibilities (9 bullish, 9 bearish) were compelling, but one was particularly noteworthy… the bearish CCI signal given for Yum! Brands (YUM). See, while the bearish clue was clear, the stock's downside was augmented by a... more

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On Wednesday afternoon of this past week, electric car maker and solar power company Tesla (TSLA) reported its fourth quarter earnings numbers.  They were good, or bad, depending on your perspective.  While revenue handily topped expectations of $2.19 billion by rolling in at $2.28 billion, the loss of 69 cents per share was even worse than the expected loss of... more

price

Ready to get started trading options?  If you're brand new to option-trading and don't yet know the difference between a put and a call, then be sure to read through the first part of this two-part lesson before proceeding.  The second part you're reading now looks at a couple of the nuances and oddities in how options are priced in... more

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