Backspreads, also known as reverse ratio spreads, are an option strategy utilized when you believe there will be much volatility in the stock but are not 100% sure whether it will go up or down. If the stock moves a lot in the predicted direction, you will earn a tidy profit. If the stock moves [...]
The Butterfly is an option position that is composed of 2 vertical spreads that have a common strike price. In other words, butterfly trading involves an opening position where options (either calls or puts) are bought (or sold) at 3 different strike prices. The way in which these options are created makes the butterfly a [...]
Stock trading is one of the last true meritocracies. All that matters for your investment success are your own decisions. Stock trading is a precision-based activity and one tiny mistake in judgment could send you plummeting right to the bottom and result in a huge loss.
Likewise, the opposite could happen. You may make a great [...]
Written on 15th February 2008 (see below for further updates)
I thought I’d provide an example of a Bull Call Spread (BCS) using the Commonwealth Bank as an example. There is a lot of volatility in the market at the moment. If you have studied my course then you will know that high volatility [...]
I started trading options in the late 90’s. After selling my first option and collecting an immediate credit I and became an option seller for life. I became a student of option selling strategies and started selling covered calls on stocks I brought and owned. I was doing OK collecting premiums month after month until [...]
I started trading options in the late 90’s. After selling my first option and collecting an immediate credit I and became an option seller for life. I became a student of option selling strategies and started selling covered calls on stocks I brought and owned. I was doing OK collecting premiums month after month until [...]
I am an active trader of option credit spreads on the SPX, NDX and RUT broad based stock indexes. I am very conservative and only enter into trades that have a very high probability of being profitable. I write OTM Bull Put Spreads first. During months when the market is moving sideways or [...]
Just as elite athletes go through a specific warm-up routine for their body and their mind before competing at a meet, we too as option traders need to follow a specific routine/process before we enter a trade and compete in the markets.
Here is the step-by-step routine that I follow each market day when looking [...]
More Than One Hundred and Fifty Years of U.S. HistoryAnyone who has seen the classic movie Trading Places knows what commodities are. For those of you who have not gotten the privilege of seeing Eddie Murphy at his best, commodities are any physical, tangible goods. From crops such as corn or wheat, to oil, gold, [...]
You Don’t need a Crystal BallOne might say that there has to be some kind of mystical knowledge being used, considering the price for the commodity doesn’t yet exist. Commodities are any physical, tangible goods, such as crops like corn or wheat, to oil, gold, and currency, just to name a few. The futures market [...]