recent posts

Strike prices and GPS
March 26, 2018
Concepts

Strike prices and GPS

Richard Ho

One day I was driving home after work and I received a call from an old friend, Alex. We started talking about the kids and the wife but, eventually, we ended up talking about the markets. Alex has some knowledge of options, but there was one thing that he didn’t understand. He asked me, “How do you know which strike price...

1022
0
Like
2 years ago
Use Bid/Ask Spreads to Measure Liquidity, Not Open Interest
March 22, 2018
Concepts

Use Bid/Ask Spreads to Measure Liquidity, Not Open Interest

Tony Zhang

One question we’re often asked about our trades is why we would present ideas that have low volume and open interest. The answer might surprise you: It’s because open interest and volume are not reliable indicators of liquidity. Option liquidity is primarily a function of the underlying stock’s liquidity. Here’s why:...

1457
0
Like
2 years ago
Evolution, Revolution or Convolution: The Changing Landscape of Exchange Market Structure in North America
March 22, 2018
Concepts

Evolution, Revolution or Convolution: The Changing Landscape of Exchange Market Structure in North America

Alan Grigoletto

Bill Gates once said, “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” There is some argument as to which nation created the first exchange....

773
0
Like
2 years ago
Option Myths and Misconceptions
March 21, 2018
Concepts

Option Myths and Misconceptions

Jason Ayres

For those readers who are just beginning their options education journey, I am sure you have been presented with many opinions from other investors and investment professionals alike, regarding the value and risk that options bring to a portfolio. Unfortunately, many myths and misconceptions have arisen due to a lack of...

2131
1
Like
2 years ago
Secret to Consistent Income with Options
March 19, 2018
Concepts

Secret to Consistent Income with Options

Tony Zhang

The success to trading any strategy on stocks or options is consistency. This is true for both researching the underlying stock or ETF, and choosing the right trading strategy. Having a consistent approach such as technical or fundamental analysis leads to reliable research that doesn’t conflict. The same applies to...

2396
0
Like
2 years ago
Buying Put Options to Hedge Shares
March 19, 2018
Protection

Buying Put Options to Hedge Shares

Martin Noël

As the following graph shows, shares in Waste Connections Inc. (WCN) have been rallying since February 6, 2018, when they bottomed out at $81.52. As I write these lines, WCN is priced at $96.67, up 18.58%. The RSI indicator and stochastic oscillator are now in extreme overbought territory. Even though this is not, in itself, an...

1395
0
Like
2 years ago
Understanding Credit Spreads and How They Differ from Debit Spreads
March 16, 2018
Concepts

Understanding Credit Spreads and How They Differ from Debit Spreads

Alan Grigoletto

In a previous posting, “Bull Call and Bear Put Spreads, Pairing Option Strategies with Forecasts” we learned how to implement a debit spread for both calls and puts. This week we will examine another form of vertical spreads: credit spreads and how they can be used. Recall that debit spreads are a limited risk transaction,...

1477
0
Like
2 years ago
Flying with Condors
March 15, 2018
Volatility

Flying with Condors

Alan Grigoletto

In a recent article we discussed how to get long volatility with the Long Option Straddle. In today’s piece we will discuss another less costly way to buy volatility with the Reverse Iron Condor. Condor strategies are named for the narrow-bodied and broad-winged bird that is primarily found in California. When diagramed, the...

679
0
1
2 years ago