Behind every transaction, there is intention, a belief. Investors typically select options strategies with a clear objective in mind based on a predetermined outlook. One of the most popular strategies is the covered call strategy. We have discussed the covered call in depth in previous posts, but here is a quick summary. The...

4 weeks ago

Generating consistent income with covered calls can be achieved when using a disciplined and methodical approach. It’s important to understand your personal preferences before searching for income opportunities on your portfolio. Choosing expirations that suits your trading frequency and strike prices that fit your risk...

1 month ago

The Black-Scholes formula is an option valuation model developed by two academics, Fischer Black and Myron Scholes, who first described it in a 1973 article. The article appeared in the same year that the Chicago Board Options Exchange (CBOE) was founded, and the model effectively democratized the use of options. Previously,...

2 months ago

Holding shares in a company gives the shareholder the following rights:*The right to transfer ownership, *The right to dividends, *Voting rights, and *The right to residual income and assets. What this means is that shareholders are free to sell their shares, take dividends when they are paid, vote at shareholder meetings and...

3 months ago

I have been told frequently – and surely so have you – that selling cash-secured puts is a very risky strategy. Haven’t you? The main reason put forward for not using this strategy is that you could be forced to buy the security, even if the company had just gone bankrupt. In this light, the strategy rightly raises fears....

3 months ago

As we saw in an earlier article, delta measures how much an option’s price moves in relation to a change in the price of the underlying asset. Delta is a variable from the Black-Scholes option pricing model, and it is also used in the industry as an approximation of the probability that the option will be in-the-money at...

3 months ago

In the two previous articles, we compared purchasing put options as a protective strategy with selling covered call options. The first article used options with monthly expirations, and the second article used options expiring after our period of analysis, from April 17, 2015 to January 22, 2016. In both cases, the analysis led...

4 months ago

Onex is a stock that has done very well over the long term. Since going public in 1996, the stock has had an annualized total return over 16%. The company places emphasis on managers owning stock and investing alongside shareholders – this is something I like to look for when investing in a company. For an investor who...

5 months ago

This week, we will look at another Greek variable, called vega. Vega measures the amount that an option contract’s price changes in response to a change in the volatility of the underlying asset. You will recall that an option’s time value is influenced by the time remaining until expiration and by the implied volatility of...

5 months ago

This week, we will look at another Greek variable: theta. Theta measures the change in the price of an option following a change in the time remaining to its expiration. You will recall that an option’s premium has two components: intrinsic value and time value. But since an option that has reached expiration has run out of...

5 months ago

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