Category Archives for Options

guide to cash secured put writing

A Simple Guide to Cash Secured Put Writing

It’s no secret that options can be an extremely versatile and useful tool when used by themselves or in conjunction with an existing stock position. The cash secured put writing strategy uses put options as a vehicle for generating income from stocks you want to own a certain price. It may make better use of investment capital […]

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how to spot volatility

How to Spot Volatility Opportunity in 30 Seconds

Investors and traders typically want price movement. A stagnant market doesn’t offer as many opportunities to profit with tight price ranges. Volatility is opportunity, pure and simple. As a market moves, the window expands to capture a piece of it. The buy-the-dip mentality of the past few years has conditioned some to load up on calls […]

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how to construct a basic risk reversal

How to Construct A Basic Risk Reversal

Instead of buying outright calls or puts, institutional traders might use a basic risk reversal, which is a mix of both calls and puts to structure a position. A basic risk reversal, however, has significantly more risk that simply buying long calls.  It’s a hedge strategy that can protect price movements, but it limits the […]

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what is the bull call spread

What is a Bull Call Spread?

The bull call spread is a long options position with a bullish bias. It may have several advantages over the purchase of outright long calls including less sensitivity to time decay (theta) as well as implied volatility (vega).  Whether it’s used with stock options or options on futures, the bull call spread may provide more efficient use […]

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demystifying time decay

Demystifying Time Decay When Trading Options

Options values and modeling can become quite complicated, but they can also follow some very simple rules. If you’re new to options, one of the most critical elements to understand is the element of theta, or time decay. Theta measures the rate of decline of an option’s value due to the passage of time. Options are a […]

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