31st August 2009
Many people enter trading, whether it be stocks, options, commodities or other markets, after having been very successful in their primary occupation. Many of these new traders are perfectionists by nature and driven to be successful.
This often leads ...
29th August 2009
It is common to see web site banners or other advertisements similar to the title of this article, touting the benefits of options trades with probabilities of success of 85-90%. Technically, these trades indeed have a high probability of success, i.e., i...
27th August 2009
Perhaps the most critical characteristic shared by successful investors and traders is their psychological approach to the market. All forms of financial investments have foundational knowledge that is essential to success in that market. I am not suggest...
13th August 2009
Many people think of options trading as very risky and suitable only for the "high rollers". In this article we will demonstrate one of the ways options can be used in conservative financial portfolios.
The basic definition of a put option is that it g...
11th August 2009
You have probably heard people refer to options as a risky enterprise, akin to gambling. And it is true that options trading can be very risky, especially when engaged in with minimal knowledge and preparation. The average stockbroker or financial planner...
03rd August 2009
Beginning options traders often are confused about the organization of option chains. This paper covers the basic concepts surrounding which options are available at any given point in time, and how that may affect the options you trade.
Equity options...
30th July 2009
This time honored saying was one of my father's favorites. It has broad applicability, but it rings especially true for stock and options trading. For example, I recently read the following on the web site of a well known options trading education firm:
...
27th July 2009
For the purposes of this article, let's assume we have a stock portfolio of conservative stocks, e.g., IBM, GE, etc. We may be realizing moderate price appreciation of the order of 5% annually plus dividend yields of 3%, for total portfolio growth of 8 to...
27th July 2009
One will commonly hear or read the following "rule of thumb" for trading:
Only trade positions with potential profits of at least three times the potential loss.
This sounds like a reasonable rule, risking a little to make a lot. However, it ignores...
21st July 2009
One will commonly hear or read the following "rule of thumb" for options spread trading:
When implied volatility is high, sell credit spreads and when implied volatility is low, buy debit spreads.
Unfortunately, this is simply not true. The credit s...
19th July 2009
Selling education on options trading is a big business. We see infomercials on television and receive emails advertising free trading software and foolproof trading systems. Unfortunately, there are many "snake oil salesmen" operating in options education...
17th July 2009
Many conservative income generation trading strategies depend on the time decay inherent in options pricing. When I establish an iron condor well OTM (out of the money), I am selling option spreads and expecting those spreads to slowly lose value as the u...
02nd July 2009
Beginning options traders often make costly mistakes due to either a lack of knowledge or misinformation about the basic parameters of options and their exercise. Examples of common errors include being surprised that one is unable to close an index optio...
02nd July 2009
Placing iron condor spreads on the broad market indexes is a relatively conservative, non-directional trading strategy that may be used for consistent income generation. This strategy profits as long as the index trades within the channel formed by the t...
