Options Trading

071117-iron-condor-pl

The term "iron condor" can be an intimidating term, even to veteran options traders who haven't take on such trades before. But, the nickname for the strategy is more forlorn than it really needs to be. An iron condor is simply the combination of two spreads that -- together -- offer a position with a limited amount of risk regardless of how far the underlying stock may move. As is always the case, walking through an example will help clarify why traders need not fear this rarely-utilized approach. In iron condor is a trade that does NOT want the underlying stock or index to move. Rather, it's a trade that achieves its maximum profitability when the stock (or index) stays right where it is at the time of entry. To that end, though it's often classified as a neutral strategy, it would be better described as a stagnation strategy. Let's… more


070717-credit-spread-pl

Think a put option can only drive profits if the underlying stock or index moves lower? Think again. While the "buy low, sell high" (or "sell high, buy low," in the case of a put trade) is still sound axiom is still good advice, limiting yourself to the straightforward purchases of options doesn't let you capitalize on one of the... more

070517-adbe-call-2

One of the first lessons any new options trader learns — even if sometimes the hard way — is the importance of getting a grip on theta, or time decay. Simply put, theta measures how fast an option price deteriorates simply due to the passage of time. It's entirely possible to make the right directional call about an equity, but... more

062017-pl-simple-composite

Last week, our Index Options Timer service closed out a nice winning option trade — a credit spread — on the iShares Russell 2000 (IWM) ETF. This position not only booked a healthy profit for subscribers, but it also serves at the basis for a nice illustration of how credit spreads work. A walk-through would be time well spent. A... more

061417-iron-condor-pl

By Rebecca Ungarino, CNBC As shares of Microsoft, along with its other big tech peers, recovered after a notable two-day losing streak, one trader is making a unique bet on the tech giant settling into a trading range ahead of its quarterly earnings report in July. By using a type of options trade called an "iron condor," Todd Gordon of... more

061317-msft-debit-spread-pl-breakdown

On Monday, our Smart Options advisory service entered into two new debit spreads… the newsletter's primary type of trade. In that a debit spread is the next natural progression of simple purchases of puts and calls yet still seems to vex some traders, a closer look at one of the trades and the thought process behind it would be time... more

061217-stx-pre-expiration-graph

On Monday, our Options Shark advisory service took on a couple of new trades, including a bearish/put position in Seagate Technology (STX). Though we normally don't discuss live trades that are quite this new — just to be fair to paying members — this is one that's already far enough ahead for our subscribers that they won't care. Besides, the... more

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