In this third article of a four-part series, we explore the concept of option hedging using the ‘Greeks’, which are five variables in option pricing represented by letters of the Greek alphabet. The variables are: Delta: Measures the change in an option’s price for each $1 change in the price of the underlying stock....
In the second article of our four-part series, we explore the concept of volatility and learn how to both protect against volatility and how to use it to your advantage. Why measure volatility? In most cases, volatility is a key metric used to gauge the risk associated with a security. In essence, the more volatile a...
Welcome to the first article in a series of four, where we’ll lay the foundations for using options as part of your portfolio management. To gain a comprehensive understanding of options and how they function, I recommend exploring the following articles: Beginner’s Guide to Options Trading Trading Your First Option...
I had the privilege of attending the Canadian Annual Derivative Conference in Montréal recently. Although it’s an event I’ve been attending for at least 20 years, this was the first time my perspective was that of a former options market maker rather than an active one. As usual, I learned about unfamiliar aspects of...
In case you missed them, dive into our most-read Option articles in 2022. You can also explore our top 5 Option articles from 2021. 1) The Secret to Managing Losses and Hitting Home Runs I have worked as a market strategist for the past 15 years alongside a few thousand retail and institutional investors in foreign...
Savvy investors are always scanning the market to find opportunities that can be exploited for profit. One such strategy consists of taking advantage of unusual options activity. Learn the ins and outs of unusual options activity in an article sponsored by National Bank Direct...
Covered call options refers to holding a stock as part of your portfolio while simultaneously selling a call option on the same stock. Owning the stock outright is quite simple but deciding which option chain to sell can be a challenge. There is no one-size-fits all approach to selling call options. Some of the variables to...
Bollinger bands are among the most widely used technical indicators when analyzing a stock and can also be used by options investors to develop strategies. The bands may reflect a trading range for an underlying stock based on recent volatility patterns, similar to how market makers price options. Option investors who are able...
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