Using the options Greeks to Enhance Hedging Strategies
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....
Using options to express market views
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...
Top 5 most-read articles of 2022
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...
Should you take advantage of unusual options activity?
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...
Benefits of a covered call option strategy
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...
Using Bollinger bands to optimize option strategies
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...
Risk management tips for active traders
Professional investors, especially billionaire hedge fund managers, spend a lot of time carefully reviewing their portfolios to ensure risk is minimized. Unfortunately, many investors fail to take the necessary steps to do the same and evaluate their holdings. One of the most important questions investors need to ask themselves...
Using options to invest in value and growth stocks
Value stocks, as the name implies, offers investors exposure to a company that is valued at a lower price relative to its fundamentals. Growth stocks often refer to small companies that operate in a new market that is likely to experience higher than average growth rates. Investors may want to seek out a mix of growth and value...
What is covered call writing?
A covered call strategy consists of an investor selling a call option on a stock that they own. While this may sound complex, covered call strategies are quite simple and suitable for some beginner options investors. A covered call writing strategy offers the investor a form of hedging against downside risk. Essentially, the...
Three mistakes to avoid when trading options
Option investors of all shapes and sizes, from billionaire hedge fund managers to new investors managing $500, make mistakes. To suggest that it is possible to avoid errors when investing is simply foolish. But what is true is that these investors can take steps to understand how to avoid careless mistakes which minimizes the...
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