When I’m explaining financial markets to someone that is unfamiliar with them, I like to explain difficult concepts using analogies. One of my favorite analogies is comparing financial markets to vehicles. I use cars in particular because everyone knows what a car is and has either driven a car or ridden in one. Each vehicle ...…
The moneyness on a single option contract is a fundamental concept to master when trading. I’d even say it’s a requirement before you put real money into the market that you completely understand these relationships. It only gets more difficult as you add complex options strategies. Because of an option’s moneyness, the option can be distinguished ...…
These past two weeks have been tough as an options trader. Differentiating between trading an a possibly irrational market or bull market trend is sometimes very difficult to assess. We all know that the stock market can push us to extremes and then, just when we “give up” and “give in” the turn happens. Timing ...…
For many people who are beginning options trading, they make the mistake of investing too much of their money in the new business. And since I get this question a lot from new traders I wanted to take time to cover it in more detail. A key part of a financial education is understanding the ...…
Casinos are built on odds and probabilities and to a certain extent, so should your trading system when it comes to the stock market. As traders we know that we are never going to be right in picking the direction or magnitude of a stock market move all the time. So why don’t we take ...…
In addition to the variety of monthly contracts available, many underlying stocks are beginning to offer weekly options. These weekly options can be employed in various trading strategies to manage both the theta and delta risk associated with options expiration. Overall, the growth in weekly options can provide a richer strategy platform that should not ...…
When most traders get started they come into the market with one thing on their mind; make money fast! Return on capital becomes more important than return of capital. Risk management and protecting your portfolio becomes an after thought to making money and earning a high rate of return. How poor and ignorant this thinking ...…
If I could sum up the stock market performance for 2011 in one word it would be: choppy. With some of the largest percentage swings in a single year since 2008 the Standard & Poor’s 500 Index closed at 1,257.60. For those who fell asleep all year, that’s exactly 0.04 points below where it started ...…
We are taking options trading education to a whole new level this year with the launch of our new video platform. I guess what I always found frustrating when trying to learn about options trading was that there was never a single, easy to navigate source with all the information I needed. I’m sure you’ve ...…
As the stock market heads into the last trading week of the year, the historical performance figures actually favor the bulls slightly. Last week the market inched out a slightly gain on the YTD return numbers. Odd how all the trading for an entire year comes down to just this last week. If stocks have ...…
Too often I hear new traders talk about how they like to buy options that are cheap because they think it’s a good investment. I can understand where they are coming from because they relate option pricing to how stocks are priced. Cheap stocks are seen as a good investment because they can quickly rise ...…
I often have a hard time trying to explain how short selling stock works and more importantly, why we need it to keep the market alive. Now I understand completely the biggest hurdle that people have to overcome when we talk about short selling stock and it’s the ability to sell something you don’t own ...…
The similarities are growing by the day as I compare the historical market top indicators for the 2008 market top and the current volatility. If you’ve been reading this blog for a while you know that I’ve highlighted this comparison numerous times before and I’ll keep pointing it out until it doesn’t work. Watch this ...…
Setting and managing price target alerts through your broker’s platform can help you be a far more productive trader. Whether you work a full-time job already or have made the leap over to trading, price target alerts can help you manage the hundreds of charts and trading opportunities each week. Narrow Your Watch List Instantly ...…
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