In this case, what is being mimicked is a long position on a stock by selling a put and buying a call at the same strike price and expiry (usually at the…
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This article was written by Chris Young and was first published on Epsilon Options (now part of SteadyOptions). The Options: Greek Vega Explained Investing in options is always challenging…
This article was written by Chris Young and was first published on Epsilon Options (now part of SteadyOptions). Below we’ll build up this payoff diagram – for both long and…
We’ll also provide some tips on how to pick the right strategy for your trading goals and risk tolerance. So whether you’re looking to make a quick profit or hedge your portfolio…
Here’s our guide to this phenomenon and its uses in options trading… Implied Volatility Skewness Background Implied volatility (IV) describes the market’s expected volatility ‘implied’ by its price. Five…
Why to prevent drawdowns? Here are some of the key reasons: Preserving Capital: When a portfolio experiences a drawdown, the value of the portfolio decreases. This can be especially problematic…
For the option buyer, the opposite is true. By owning an option, the trader has the potential to score a big profit—if the underlying asset makes the anticipated move. However,…
For example: You see a credit spread with a market of $1.00 bid and $1.60 ask. There is little chance of selling the spread and collecting $1.45 or $1.50 (unless…
There are benefits to delta-neutral trading. One of the primary benefits is that it can help you minimize your risk. By hedging your portfolio against directional risk, you can reduce…
Looking at a common situation, suppose that you have written a covered call. You owned 300 shares of YFS (Your Favorite Stock Inc.), watched it rally, and finally decided that…