by David L. Caplan The "free trade" combines the best principles of money management and taking advantage of "undervalued" and "overvalued" options. However, the most exciting aspect of the "free trade" is that it can allow you to build a large position in a...
by Dale Brethauer All the focus in the stock market literature is on making a good trade entry. Yes, that is important, but the exit is where a lot of money can be gained or lost. You also want to know when you will exit before putting on the trade. This allows you to...
by Oliver Velez Know Exactly How to Play the Market Trend We know the two foundational keys; the market's basic unit and the only three trends in existence. Based on this concept, I have identified the instances in which we want to buy or to short the stock. Once...
by Thomas DeMark Calendar spreads can also be referred to as horizontal spreads or time spreads. Whereas vertical spreads are used to take advantage of price movements in the underlying security, horizontal spreads are used to take advantage of time erosion and...
by Stephen Bigalow Complicating the analysis of covered calls is the fact that the uncovered put has the same market risk. Even though these two strategies are opposite (because calls and puts are opposite), the analysis points out an interesting similarity. The...
by Adam Oliensis We use volume as a secondary tool, one that can provide confirmation or non-confirmation (divergence). On Balance Volume On Balance Volume (OBV) is a cumulative total of each day’s volume. When the closing price increases, that day’s volume is...
by Kathy Lien Although risk management is one of the simpler topics to grasp, it seems to be the hardest to follow for most traders. Too often we have seen traders turn winning positions into losing positions and solid strategies result in losses instead of...
by Dan Keen After you have done your research homework, and you have found a company that looks like a good candidate for writing a covered call, it’s time for one final consideration. How much money can you make on the play? We have to look at the option premiums and...
by Lee Gettess One of the questions that always amuses me when I talk about potential entries with other traders is “Well, does it work?” My answer usually involves asking them to define “work”. An entry is only as good as the exit that accompanies it; and...
by Rob Roy Strangles differ from Straddles only by the fact the trade uses two separate strikes rather than the same strikes as in a Straddle. The risk graph below shows what the P&L of a Strangle would be. For the Strangle risk graph, imagine for a moment the...