Understanding Bitcoin Futures and Value
There are many reasons why investors shy away from Bitcoin and other cryptocurrencies. Volatility, liquidity, lack of intrinsic value and historic data are near the top of the list. But now that there are futures contracts for Bitcoin, it is gaining popularity and credibility. The search for intrinsic or fair value usually includes violent price […]
The Greeks: Sometimes Friends, Sometimes Foes
From the Journal of a Stay-At-Home Trader: Struggles on the Journey I admit it. I actively avoided the Greeks for a very long time. When I came across Dan Passarelli’s Trading Option Greeks — the first edition — I added it to my Amazon wish List. And there on that list the title sat … […]
Crude Oil and USO Long-Term Targeting
Just a few years ago crude oil was going for about $120 a barrel. Then in late 2014 oil prices began a histrionic decline. Before all was said and done, oil dropped $80 over the next 16 months. The bottom formed in early 2016 and for the next 22 months we saw choppy trend trade. […]
Option Sayings Worth Repeating, Part II
A couple of weeks ago, I did a blog about a few of my favorite option sayings. In this post, I will add three more to the list and briefly try to explain what I mean. If one of them strikes a chord with you, then it was well worth it because each one has […]
Options Sayings Worth Repeating
My one-on-one and group coaching students hear me repeat phrases often. Why do I repeat them so frequently? I want them to know how important the lesson is and I want them to hear my voice when the situation arises and think about what they need to do or consider. I am going to cover […]
Is There an Effective Delta?
We talk about option delta very frequently in this blog and in my Group Coaching class and although the concept may be well-known to many of you by now, it still bears revisiting time and time again because of its importance. I would venture to say that once an option trader learns what a call […]
Do Trailing Stops Make Sense for Options?
The market has moved higher, lower and higher again over the last month or so. Even though the market has rallied as of late closing at all-time highs yet again, there’s still a potential for the market to move yet lower again. Regardless, whether the market continues to move higher or lower, it is always […]
Multiply Your Delta
In my Group Coaching class, I often give the traders a quiz with many of the questions pertaining to the option greeks. Despite delta being the most recognizable greek in most cases, option traders still struggle to determine how it truly functions. Even if you think you have a pretty good grasp of delta, I […]
Trader Checklist Guide – How to Win as an Option Trader
Spend time with a broker or pit trader from the era when all trades were executed at an exchange and you will learn a lot about the auction process and the information it provides. Trading pits are spheres of activity that appear chaotic to the untrained eye. But for a seasoned observer. a trading pit […]
Define Value and Define Risk
For traders, risk is one of the hardest things to define after entering a trade. Risk is a change in momentum. If a short position is taken due to negative momentum, that trade should be held until momentum turns positive. Conversely, a long position should work until momentum turns negative. To define risk, we must […]
Different Risk/Reward Scenarios
If you have heard me before, you have often heard me say that options have so many moving parts. There are so many more areas to learn and understand than there is for say just trading stocks. As an option trader, you have so many different strategies and risk/reward scenarios to think about before initializing […]
What Is Fair Value and How Does Volume Play a Part?
Over the past 30 years, 20 of which were on the trading floors of the CBOT and CME, I have been a broker, analyst and educator for many types of traders. Whether they were speculators, hedgers or fund managers they were asking similar questions. Where is fair value or where has most of the volume […]
Multiple Option Opportunities on the Same Stock
As option traders, there are some trade opportunities to profit week after week or month after month on the same underlying. These so-called opportunities can be based on the option market or charts, but usually it is a combination of both. The problem that some traders have is that they “go to the well” once […]
Order Flow and Trading Volume Techniques
Most traders trade price. The truth is we all trade price. However, prices are determined by traders placing orders in the market. Those orders are what is seen on the bar and candlestick charts on our screens. Look under the surface and visualize what is taking place. Most traders are either unaware or do not […]
Time to Consider an Option Strangle?
The market has been quite volatile over the last several months. With the Federal Reserve threatening to raise rates, a mixed bag of quarterly earnings and the past presidential election, there is a decent opportunity that the markets may continue to be volatile. Let’s take a look at an option strategy that may be able […]
Ever Consider a Trailing Stop for Options?
The market has moved higher, lower and higher again over the last month or so. Even though the market has rallied as of late, there’s still a potential for the market to move yet lower again. Regardless, whether the market continues to move higher or lower once again it is always a good time to […]
Option Adjustment Strategies You Must Know
I have stated my option adjustment strategies numerous times including this past week in Group Coaching. Although I personally do not like using the word “adjustments” with options trading (I prefer your new outlook or just a new trade), there are many times they need or maybe should to be done. Adjusting option positions is […]
How to Build an Options Watch List to Find Trade Opportunities
If you are a NFL football fan, you probably know that we are getting ready to start training camp in about a week. Teams are gathering information about themselves and their opponents and trying to gain the upper hand over them which ultimately could lead to a victory. Just like in option trading, a well […]
When to Consider a Trailing Stop for Options
The market has moved higher, lower and higher again over the last month or so. Even though the market has rallied as of late, there’s still a potential for the market to move lower. Regardless, whether the market continues to move higher or lower once again it is always a good time to talk about […]
Are Cheap Call Options Worth It?
It seems like every so often in my Group Coaching class, a student will ask me about buying a deep out-of-the money (OTM) options. Many option traders especially those that are new, initially buy deep out-of-the-money options because they are cheap and can offer a huge reward. Unfortunately many times, these “cheap” options are rarely […]
Stock Repair Strategy Using Options
It has been a rough start for investors in 2016 with stocks dropping even more in than they did in December 2015. Is the market ready to rally soon? Some stock buyers are waiting for some of their losers to make their way higher and some are buying more stock at cheaper prices. But as […]
