by Rob Roy Selecting the strike that is best for each trading strategy will depend on several factors. Straddles and Strangles are directional techniques and a trader can use the nature of how option prices change, via delta, to gain the best “bang for their...
by Chris Verhaegh With Straddles and Strangles, there is no bias in direction. We buy Straddles and Strangles when we expect greater Volatility than the Market has priced in. We buy Straddles when the stock is at or near the strike price. Since these...
by Andy Chambers If you’re inexperienced at trading options, you’ll soon discover that at any time, an option will have three different prices. Understanding the first of the three prices is easy, it’s the price the last time the option was traded. We...
by Dan Keen At-The-Money Plays Sometimes an option’s premium is high enough that it would be worthwhile to buy the stock and write an at-the-money call with a strike price at the same price you bought the stock. The reason for doing this is because the premium...
by Lee Gettess Stochastics, Relative Strength Index (RSI), Moving Average Oscillators… virtually every technical trader attempts to make use of at least one of these tools, but the statistics show that very few of them meet with success. Does that really mean...
by Kathy Lien Capital flows and trade flows constitute a country’s balance of payments, which quantifies the amount of demand for a currency over a given period of time. Theoretically, a balance of payments equal to zero is required for a currency to maintain...
by Ray Frazier For expected bearish moves in a stock, and therefore a possible bearish put option position, I look for breaks in the stock price’s support and then confirmation of the break from at least one other indicator. Below is a chart of AOL which shows the...
by Jea Yu Options usually price in 2.50 increments up to $50, and then move in $5 increments – most of the time. However, the very thick liquid stocks and index options can price in $1 increments. These levels are called strike prices. Equity options...
by Keith Cotterill Futures contracts are standardized. This means they have a predetermined quantity, quality, specified time and location for delivery. Futures contracts are also known as exchange traded obligations. This means that they are transferable legal...
by Peter McKenna Imagine that you are an event trader and all the conditions for a Green Alert Day have been met. Day after day, sellers have dominated in the trading action, driving the market to greatly oversold levels. Recent economic indicators have been negative,...