How Earnings Affect Implied Volatility
The market continues to be very volatile. It seems anything a Federal Reserve member comments on moves the market. Inflation numbers have caused big moves as well. Implied volatility levels have risen from the previously low levels of a few weeks ago. With a new round of quarterly earnings about to kick off, let’s consider […]
What Has a Better Chance of Happening?
I ask traders this all the time when I am teaching technical analysis: “When you look at a chart, what has a better chance of happening?” In fact, we should ask ourselves this question in many situations that do not involve trading, but that is a discussion for another time. As option traders, we try […]
This Option Strategy Continues to Impress
I love to find profitable trade ideas and teach traders how to manage those trades in MTM’s daily live group coaching class. And if you have spent any time with me in class over the past several years, you have seen me model out long double calendars. My favorite underlyings for these trades have been […]
Returning to the Proverbial Option Trading Well
I am often asked, “When I have a profitable trade and the setup still looks good, should I take the trade again?” The answer is, “Absolutely! Why not?” If the setup is still there and you feel the same about the trade and market, it totally makes sense. Different From an Adjustment When option traders […]
Delta vs. Gamma: What’s the Difference?
It is and always will be debated which option greek is the most important. In fact, there most likely will never be a definitive answer to that question. It may depend on the strategy. Many option traders will refer to option delta as the most important option greek, and that is understandable. I would venture […]
Time to Tighten Up Your Option Management
Volatility in the market has become the norm…this first week of March 2024 in particular as Federal Reserve Chair Jerome Powell testifies in front of Congress for two days. There have been some sizable market swings. Should you manage your option trades differently in a market like this? You have to decide that for yourself, […]
Sometimes Deeper In-The-Money Is Better
With the market moving higher, we have consistently modeled out several bull call spreads in group coaching class in recent months. Here is something to think about next time you are bullish as an option trader and are considering a bull call spread. Many times, moving the spread in-the-money (ITM) makes sense from a probability […]
The Art of Not Fighting the Tape
In trading, where the only constant is change, the adage “Don’t fight the tape” is a good one. That simple principle is profound but sadly often underestimated. As someone who has navigated the turbulent waters of options trading, I’ve come to appreciate the elegance of this trader idiom. It’s not just advice; it’s a survival […]
A Short Iron Condor in Boeing
In MTM’s daily group coaching class, we have modeled out several iron condors recently including one in Boeing that we’ll explore below. A short iron condor is a generally market-neutral strategy that combines two credit spreads. A call credit spread is implemented above the current stock price and a put credit spread is implemented below […]
Let’s Chat About Option Vega
Implied volatility or the lack of it has been a hot topic for option traders over the past several months. If you are unfamiliar with IV and/or option vega, here is a brief explanation to get you up to speed. Option Vega Vega measures the impact implied volatility (IV) has on option premiums. Keeping it […]
Is 2024 Going to Be Different?
Are you frustrated as an option trader? Are you ready to make some changes? Do you know what changes you need to make? Clearly, these are all important questions. And if we are being honest, you don’t need a new calendar year to make you realize you need to change. So, here we are about […]
Theta Can Help Your Unwanted Delta
If you have attended MTM’s Group Coaching class, you probably know how much I love time spreads. In fact, I even have a T-shirt I like to wear that says so. Calendars happen to be my favorite time spread, usually of the short-term variety. If you are not familiar with them, long calendars consist of […]
No One Is Forcing You to Trade
Who doesn’t love to trade? If you are reading this blog, you probably do. The market has been crazy volatile for months. However, it is hanging in there for now and has refused to move much lower. Directional trends have been difficult to capture, and implied volatility levels have been painfully low. What does an […]
Unleashing the Power Chords of Option Trading Volatility
Hey, fellow rockstar traders. Let’s crank up the volume on option trading volatility, shall we? Picture the market as a rock concert, and options as the power chords that let us jam with the ever-changing rhythms of volatility. Yes? OK. Let’s turn it up to 11! Verse 1: The Market’s Rock Anthem Every trading day […]
Spend Your Time Wisely as a Trader
Becoming successful and profitable as an options trader takes hard work and a lot of time. If you trade options, and I assume you do, you already know this. As I like to say, management is the most important part when it comes to trading. But having a better understanding of the time required behind […]
These Are a Few of My Favorite Sayings
As a longtime teacher of options, I’ve developed a few favorite sayings related to trading, and I repeat them often in my group and individual coaching sessions. I love to hear my students say they hear my voice in their head repeating these sayings. Today, I will share a few and briefly explain what I […]
Discovering the Option Trader’s Mindset
Option trading is an intricate financial strategy that demands a unique mindset, combining analytical prowess, risk management skills and emotional resilience. Winning option traders are not just adept at understanding market trends and financial instruments; they also have a mindset tailored for the challenges and opportunities presented by the dynamic world of options. In this […]
Don’t Bite on the Head Fake
The opening of the market can be a crazy, anxiety-filled time. Many experts will tell you not to trade at the open, but that can be debated. Many times, especially in this market, there are sizable gaps higher or lower to start the session. If you are watching the underlying or have an already-established position, […]
An Alternative to Selling Option Premium
We have talked many times about the draw of selling out-of-the-money (OTM) vertical credit spreads for an option trader. Putting it bluntly, the odds are on your side to make money. But guess what? The risk/reward is not so sweet. If you have looked at implied volatility (IV) levels and option prices recently, you know […]
Too Much Is Not a Good Thing
About once a year in MTM’s Group Coaching class I go over common option trading mistakes and things to think about as an option trader. It’s a series of several presentations, and each contains five tidbits. There were two recently that inspired me to write this blog: having too many low risk/high reward trades and, […]
Avoiding Stress as an Options Trader
It is impossible to avoid all stress. Unfortunately, it is just a part of life. Obviously, as any doctor or health professional will tell you, you should avoid stress and stressful situations as much as you can. Naturally, that is easier said than done for most. So, what can we do to avoid stress? I […]