Options Trading

091217-tlt-pl

Earlier this week our Index Options Timer service booked 19% gain on a credit spread trade on the iShares 20+ Year Treasury Bond ETF (TLT)... a bearish bet, essentially.  In the grand scheme of things this trade wasn't all that different from any of the other trades we take on in the IOT newsletter. But, in that this particular position is a good one to use as a means of teaching others about the power and potential of credit spreads, we want to go back and take a closer look at it. Just to set the stage for any newcomers to options trading (or as a refresher for those who may have forgotten), a credit spread is a two-piece trade consisting of one long option -- meaning we're buying it -- and one short option, meaning we're selling it. In this case the call we sold (or sold short) was… more


gamma

On Thursday, our Options Shark trading advisory locked in a 57% gain on some Bed, Bath & Beyond (BBBY) puts… one of several nice winning trades the BigTrends team has made of late. Though we issue far more trading ideas than we could ever review — as a learning tool — this is one worth going back and taking a... more

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... 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

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