by Chris Verhaegh The laws of option pricing state the following: An At-the-Money option always has the highest time value. It’s time value will drop whether the stock’s price change causes it to go either “In-the-money” or “Out-of-the-Money”. Not some of...
Have you ever heard of, “Triskaidekaphobia?” It’s the Fear of the number 13. What about the Fear of Friday the 13th? I googled it and found two different words to represent that Fear: Araskavedekatriaphobia & Paraskevidekatriaphobia. But if you’re an Option...
by Chris Verhaegh What do I mean by a gap? Below is a great chart that shows gaps and how they fill. Notice how the price “gaps” down between Sept 10 and Sept 11. Then, only a few days later, the price reverted back and “filled” the gap. Meaning the price came...
I must’ve struck a nerve with someone over my article yesterday. I proposed that it would have been impossible to duplicate the results of the trade I shared yesterday, on the basis that I was able to take this Asymmetrical Put Butterfly Spread all the way to...
With Cash Settling Options, you don’t have to Sell to Close (STC), a position that you Bought to Open (BTO).I bought one position today. One hour and 45 minutes before the close, I purchased the following Asymmetrical Put Butterfly Spread for a net debit of $3.55....
Below are the charts of SPY & SPX from Tuesday, September 3 (they are set to the Mountain Time Zone). The Markets opened after a 3 day weekend at 7:30 AM Mountain Time. They basically sold off for 6 hours 17 minutes. At which time they made a sharp turn around...
Below is an intraday Chart of SPY for Friday, August 30.The chart is set to Mountain Time as I live in Boise, Idaho. The Market opens here at 7:30 AM and closes at 2 PM. While I consider this the best trading hours in the country (not too early with so much of the day...
by Chris Verhaegh Bollinger Bands consist of upper and lower envelopes that surround the stock price on a chart. They are generally plotted as two standard deviations away from a 20 period simple moving average. This is the primary difference between...
by Chris Verhaegh Market Maker’s use this knowledge to their advantage through a formula I call the “Market Maker’s Hedge”. Let’s say we have a stock priced at $100. The $100 Call is priced at $2/$3 Bid/Ask and the $100 Put is priced at $2/$3. Let’s assume the Market...
by Chris Verhaegh The entire PULSE System is based on math. The math centers around but is not limited to option pricing and the “Greeks”. We add historical precedence to map out a game plan. We try to make low risk – high reward trades in an effort...