The “In’s and Out’s” of a Diagonal Spread – Aeromir The diagonal spread is a popular trade strategy. It consists of purchasing and selling two options, in different expiration cycles and different strike prices. The diagonal can be positioned with either a bullish or bearish outlook, depending on your market. The strategy can also be used in a similar manner as a covered call.
Consider Sector ETFs as a Portfolio Hedge – Aeromir Sector ETFs provide a liquid, relatively low cost, method for a trader to add diversification to their portfolio. Rather than invest in stocks for a particular industry, sector ETFs can provide less risk than purchasing stocks in that industry.
Understanding Assignment in Options Trading – Aeromir The word "assignment" in options trading can make some traders fearful of the outcome. Joanna talks about what to expect if you get assigned on an option position, and what steps you can take to avoid assignment.
Discover Pairs Trading – Aeromir Pairs trading often combines a long position with a short position, using a pair of highly correlated assets. A pairs trade can use any two assets. Many times traders use assets such as two stocks, two exchange traded funds, two currencies, two commodities, two options, or two futures.
Credit Spreads; a Review Of The Basics – Aeromir Credit spreads are a popular options strategy used by many traders. They can be used as a stand-alone trade, or as a hedge to a current position or portfolio. It is important to understand the basic setup of the trade, as well as the potential gains and losses.
An Overview of Market Profile and Trading – Aeromir Market Profile can help traders get a feel of the context of an underlying; it is a different way to look at the market in depth. Market profile compiles information from the past and combines it with the present to help forecast the potential future. This information is gathered and provides areas on a chart to help traders formulate a trading bias. While it takes time to become a master at market profile, it can be a very useful tool in evaluating an underlying.
What is a Calendar Spread? – Aeromir A calendar in options trading, also referred to as a time spread, can be a trading strategy that takes advantage of time decay and changes in implied volatility. Calendars can be entered as either long or short positions. The risk of a long calendar is limited to the debit paid for the calendar, but the short calendar is subject to a greater risk.
Diversification; Why it is Important for Traders – Aeromir "Don't put all your eggs in one basket". This saying goes for many things in life, including your trading portfolio. Diversification is an important element for traders to consider when allocating their capital. There are many ways a trader can diversify their portfolio; Joanna talks about some of the key points to help int the decision-making.
What is a Risk Reversal Strategy? – Aeromir A risk reversal can be a useful strategy for traders to use when they choose to hedge a stock position, or their overall portfolio. Risk reversals can help guard against a major market move. Risk reversals are a position that uses call and put options, or call spreads and put spreads. They can be placed with either a bullish or bearish outlook.
What are Intrinsic and Extrinsic Option Values? – Aeromir Learn the importance of understanding intrinsic and extrinsic value of options. Newer traders particularly can benefit from this detailed discussion of the calculations for intrinsic and extrinsic value of several different strike prices on an option chain.
Introducing the Iron Condor – Aeromir The Iron Condor is a popular options trading strategy implemented by many traders. There are many variations to the Iron Condor, this article focuses on a traditional Iron Condor which is a balanced combination of call credit spreads and put credit spreads.
Night Owl™ Trade Advisories – Aeromir Mark Ansel developed the successful Night Owl™ trade advisories which use the square of nine to generate price levels for Crude Oil and Euro futures. Average 78% wins and +5% to +6% profit per month.
What is a Broken Wing Butterfly? – Aeromir The broken wing butterfly is an advanced strategy involving the use of multiple options. the butterfly strategy is generally thought of as a neutral to slightly directional strategy, which can often benefit when the market does not move too much in price.
Gamma; How it Can Affect Your Options Positions – Aeromir In the options trading world, gamma is referred to as the "Delta of the Delta". Gamma measures the rate of change in the Delta of an option for every one point move in the underlying instrument. It is important for traders to be aware of gamma; as it increases it can dramatically affect position in terms of its profitability.
Momentum, Rate of Change, and Divergence … What They Mean to Traders – Aeromir Many options traders use the momentum indicator, along with rate of change and momentum divergence, to help give them a signal something may be changing in any particular underlying instrument. Used along with other technical indicators such as support and resistance, volume, and price action these momentum indicators can be another tool for your trading toolbox.