What Has a Better Chance of Happening?
How many of us wish we had more patience? I will be the first to raise my hand. It is a key attribute to being a successful trader, in my humble opinion. When the market is open and those numbers are moving around, your blood is pumping and your emotions are probably running high. But […]
It’s All About Experience as an Option Trader
Learning how to trade options effectively takes time. And let’s face it, for many option traders real, ongoing success never comes to fruition. Most traders cannot extract money from the market on a consistent basis because, well, it’s hard to do so. So why do we try? We try because it is rewarding to be […]
Bid-Ask Spreads Can Be Deceiving
The market has certainly been on a mission lately, moving higher over the past several weeks after a big decline. In addition, implied volatility (IV) levels have continued to drop after spiking higher for a few days. That is not a good thing for option traders who love to sell premium. But the good news […]
Option Trades Near the Close
There’s no denying that this market is extremely volatile. It’s a difficult environment for swing traders and may be more suited to day traders. There is never a guarantee when the market closes that it will open higher or lower the next session, even if it’s a bullish or bearish close. We can, however, observe […]
Take the Odds for a Bear Call Spread
On a recent Monday morning in MTM’s Group Coaching class, a student trader asked me to look at a trade idea involving Goldman Sachs Group, Inc. (GS). Teaching and examining trade ideas is what the class is all about, so I was more than eager to check it out. The trade idea was a potential […]
Patience Is a Virtue in Volatile Markets
The markets have remained very volatile over the past several weeks. At the time of this writing, the S&P 500 had fallen over 2.3% in a day. It has been a bumpy road over the past few months for sure, and most likely it will continue to be for several more. Even though the markets […]
Add This to Your Trading Mantras
I love to share my favorite sayings when it comes to option trading with my students. These mantras have helped me solidify some principles I needed to reinforce. And lately, there has been one in particular that I have stressed to my students, especially in this volatile environment: If you are down more than expected […]
Taking on Your Option Trading Day
Every so often, I like to remind option traders about things they need to think about before, during and after their trading day. Clearly, there are a lot of moving parts in making that decision, but there are also more than a few constants. Here are some factors I consider each trading day. Current Market […]
How Implied Volatility Affects Vertical Debits
In contrast to historical volatility, which looks at actual stock prices from the past, implied volatility looks toward the future. Implied volatility (IV) is often interpreted as the market’s expectation for the future volatility of a stock and can be derived from the price of an option. Specifically, IV is the expected future volatility of […]
Take Advantage of a Bullish Base
We frequently talk about bullish bases in MTM’s Group Coaching class, especially with the market moving higher for much of the year so far. But what does a bullish base look like and how can we use it for a potential bullish entry? Here’s a brief explanation of what a bullish base is and what […]
Long-Dated Calls Still Work in This Market
Recently in MTM’s daily group coaching class, we talked about how bullish and resilient the market has been. Sure, it has pulled back at times, but eventually it has rallied and moved higher again. At the time of this writing, that is exactly what was happening. In class, we decided to consider buying a long […]
Look For Pullbacks in NVDA
Not sure if you have heard about a little, old stock called NVDIA (NVDA). It has been the talk of the market for several weeks now. The stock has moved vigorously higher for quite some time, especially since the beginning of this year. Then the company announced a 10 for 1 stock split, which pushed […]
Equity Options for Sideways Action
The market has been doing a lot of up and down action over the past few weeks, not really going much higher or lower overall. Many stocks are doing the same thing. Certainly, this is better than stocks moving lower, but it still can be frustrating. If you own shares and know about options, there […]
Not Trading Is Always an Option
If you have been monitoring the market over the past several months, you have seen lots of volatility without much implied volatility. That is not a good combo. Not only has there been a lot of slop and chop, as I like to call it, but we’ve also seen many moves that have been extended […]
Smart Traders Record Their Trades
Option trading is like the game of golf. You can never be perfect at it, but you can always get better. As I like to say, “the one thing I cannot teach as an option trader is experience.” The obvious question, then, is how does one gain that experience. There are two ways, and one […]
An Option Watchlist Is Critical
So many of the option traders I work with ask me how to find the best trading opportunities. Without an options watchlist, I believe many traders are just searching aimlessly for opportunities. The key is to keep the list active and updated without letting it get so big that it does not help anymore. Having […]
Watch How a Stock Closes
Getting an edge using technical analysis is crucial when it comes to trading. If you hold a position overnight, there is never a guarantee how the market will open the next session. If only we knew, right? Trading would be a whole lot easier and less nerve-racking. There is something I have found, however, that […]
Managing Trades Around Volatility Events
The market has been very volatile over the past couple of months. It’s true that sometimes market movement occurs at times without volatility events. But cognizant traders and investors need to be ready when they know a volatility event is coming. Here are a few easy things to do to be prepared. Use Collars for […]
Delta Is Lead Dog for Vertical Credits
I model out several vertical credit spreads every day in MTM’s Group Coaching class. And every day I talk about delta being the most important greek, in my opinion, for vertical credits. Most option traders associate credit spreads as mostly a positive theta trade. I am going to show you why I believe delta is […]
Profiting From Uncertain Option Trades
There are a lot of sayings I like when it comes to option trading. Many have been passed on for several decades, and many of them I have come up with on my own as an options instructor. But my latest one may be the most important to adhere to because it can make the […]
Option Trading Is ‘Almost’ Always a Trade-Off
When I talk about options, which is quite often, I like to say that everything in options is a trade-off. As I tell my students, if you give up this, you get that in return and vice versa. If you have a better risk/reward trade, the probability of a profit is lessened and vice versa. […]