Volatility is one the key differences between investing in options and investing in stocks. It may be the single most important difference between the two financial vehicles. As a result, understanding volatility in detail is critical to your long term strategy. For all intents and purposes, you cannot know too much about this esoteric, complicated … Continue reading Understanding Historical Volatility
How you pay for a contract matters. One of the many ways that options traders secure their position is through the use of spread trading. This technique helps offset the risks of taking an option position by selling off another one. From bulls and bears to ratios and boxes, there are many different types of … Continue reading Credits, Debits, and Trades
It is time to talk simulators but, we are sorry to say, not virtual reality. At least, not in the Star Trek sense. But in the financial sense… we are closer than you might think. You see, here is the situation. You have signed up for an account to buy and trade options contracts. You … Continue reading How to Use Options Simulators
It is a golden rule that investors should diversify their portfolios. From bonds and mutual funds to real estate, there are a lot of different ways to do that. Why should one of them include options? Ultimately, it depends on two factors: your specific goals and your capacity for risk. Just about every financial decision … Continue reading Who Should Trade Options?
Long term assets are tricky things. How you plan for an option contract depends, in large part, on how long you intend to hold it. A position that stays open for a few weeks can be built around one expected movement or momentary volatility. By contrast, over the course of a year, that same asset … Continue reading Should You Make It a LEAP Year?
In the early 1900’s police would periodically arrest people for setting tolls on the Brooklyn Bridge, after the would-be toll setters had been duped into buying the bridge from George C. Parker in the first place. Tulips once overtook and then sank the entire Dutch economy. And, of course, the Shake Weight exists. The point … Continue reading Five Mistakes to Avoid with Options Trading