Are you looking for something a little less aggressive than your recent trades have been? How about a strategy with a lower risk, higher-odds profile... even at the expense of some upside? (After all, a reliable handful of small winners is just as good as the occasional homerun.) Option spread trades are one possibility. And don't let the fancy name fool you. They're not that complicated. In fact, we can walk you through one of the recent winners recommended by our Debit Spread Trader Advisory Service. There's nothing like learning from a real-life example. But, first things first. What the heck is a spread? In simplest terms, a spread is a two-option position aimed at making money across a range of possible prices for a particular stock or index. The space between the higher strike price and the lower strike price of the two calls or puts in question is… more
It's one of those things even many veteran option traders ignore, dismissing it as a distraction rather than helpful. And truth be told, if you never gave it a second thought, that would be ok. If you want to give yourself a surprising options-trading edge, however, vega can help. Here's why. Vega is one of several so-called "greeks" often used... more
With just a superficial glance it looks like the market's rolling again, led by the FANG stocks. The NASDAQ Composite jumped 0.87% on Monday, and while that doesn't carry the tech-heavy index to record highs, the S&P 500 accomplished that feat in today's action. Equally telling is that the Dow lost ground, implying traders are turning in their blue chips... more
— Most stock charts will give you subtle clues as to what traders are truly thinking. You just have to know where and what to look for — We're big fans of trading systems, as they take the emotion-supplied pitfalls out of trading and turn it into a process; emotionally-driven decisions tend to do more harm than good. We'd never... more
How does the old saying go? Two heads are better than one? It's not always true, but the point is well taken. Sometimes one person sees something another person may not see, and as such, capable of steering the duo away from trouble or perhaps into an unnoticed opportunity. The idea applies to trading too… in a sense. While most... more
What's the key to becoming a truly great option trader? Obviously being able to spot the true trend of a stock or index is critical, but plenty of people can do that without necessarily turning that skill into rip-roaring gains. The other critical component of doing well in this business is using the optimal calls and puts in the first... more
Whether you're an option trading veteran or a newcomer, you've likely come across the term "gamma." And, whether you're an option trading veteran or newcomer, you've likely looked right past it to focus on the more approachable and less esoteric matters to trading. And that's ok. Plenty of traders find good success without mastering these less-used "Greek." On the other... more
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