What’s a Strangle and How Can You Use It in Options Trading?

In an earlier post, the concept of the straddles in option trading, a strategy where traders take out call and put contracts on an otherwise identical position, was discussed. Well, the strangle is pretty closely related to a straddle, but it is a little more complicated. Here’s how it works: The Strangle The strangle is … Continue reading What’s a Strangle and How Can You Use It in Options Trading?

How Speaking “Greek” Helps You Reduce Your Options Trading Risk

Notation is key in any profession, whether law, medicine, science or money, and somehow all of these fields have agreed that the best way to write down complicated ideas is with the Greek alphabet. Lawyers use the Greek letter “pi” for plaintiff. Doctors use “alpha” to refer to chemical relationships, while scientists use “delta” to … Continue reading How Speaking “Greek” Helps You Reduce Your Options Trading Risk

How the Dow Works

A few numbers make the world go round. The unlimited value of pi. Planck’s constant. e. 867-5309. And, of course, the Dow Jones Industrial Average. One of the most common shorthands for the health of the US economy, many people believe that the Dow measures the total value of the U.S. stock market. This is … Continue reading How the Dow Works

Five Strategies From Iron Condors to the Married Put

The option trader’s playbook can feel like sitting through an old-time grifter movie. Bull calls, costless collars, covered straddles… they sound almost like bad fiction. Fiction, they are not. In fact, many of these strategies are required reading for any would-be derivatives investor. (We've already discussed covered calls and shorting against the box!) Here are … Continue reading Five Strategies From Iron Condors to the Married Put