Options Trading Strategy
Three Rules For Trading During A Bear Market
Novice traders treat bull and bear markets the same. “I just trade like a bull market in reverse!” It’s 100% not that simple. Bull markets tend to move steadily up… bear markets are incredibly volatile. That’s not to say you can’t make money during this crazy market. You simply need some rules of thumb to […]
To Hedge Your Portfolio For Free
An intriguing way to hedge your portfolio’s downside risk for essentially no cost is by using a put spread collar. A large zero-cost put spread collar was placed last week on the SPDR S&P 500 ETF (SPY). The trader sold calls and used the proceeds to purchase a put spread. The position will give a […]
This Trade Can Make Money Whether A Stock Goes Up Or Down
One of my favorite trading strategies—and one that big-time money managers and volatility traders use—is trading an iron condor. An iron condor is selling a downside put spread and an upside call spread at the same time. In this scenario, you cap your risk because you have a spread with a defined loss. At the […]
Selling Puts – A Simple Options Strategy
Selling puts is a neutral to bullish strategy. Traders tend to overcomplicate things. This is especially true with options trading where puts and calls can be bought and sold in seemingly endless combinations with cute names like calendars, diagonals, butterflies, iron condors, ducks, lizards, and so on. While more complicated strategies have their place, are […]
Stock Replacement, A Smart Options Strategy For Traders
In 2018, I wrote about a stock replacement strategy when the market was hitting an all-time high. With nothing but clear skies, no visible ‘overhead’ on the charts, and an economy seemingly firing on all cylinders, investors might have rightly viewed advice to temper their bullishness with skepticism. However, that environment and attitude seem worlds […]
Covered Call Writing
Generating Cash Flow From The Energy Sector
The energy sector has been far and away the best performing sector over the last year with both oil and gas prices having been on the rise. A popular way to trade the energy sector as a whole is through the Energy Select Sector SPDR ETF (XLE). XLE has been a solid gainer for 2022, […]
The Synthetic Dividend Option To Generate Profits
Many companies regularly distribute a portion of their profits in the form of a dividend to attract investors and incentivize them to remain long-term shareholders. But most companies, ETFs, and commodities don’t pay a dividend at all. When there’s no dividend, the only opportunity for income or a profit comes from a capital gain (or […]
How To Calculate Your Impressive Covered Call Returns
Talking about investment yields and returns can be confusing, and actually understanding what happens can be even more daunting. However, we are trying to make money on our money, and understanding potential returns – both as percentages and dollars – helps separate good opportunities from those that are less attractive. If you have dabbled with […]
Which Is Better: Covered Calls Or Cash-Secured Puts?
Covered Calls and Cash-Secured puts seem to be the most popular choices among traders in finance and stocks. And for a good reason. The two trades in the same market, just on different terms. That’s right. And it all started with the same idea… Both kinds of trading are pretty much the same, except for […]
Why Smart Investors Use Covered Calls To Profit
Recent market volatility has both put traders on edge and pumped up the volatility in options. Those two usually go hand in hand and they create a great opportunity for longer term investors with a cooler demeanor to capitalize on the current dislocation. One of the best, and most popular approaches, especially among investors that […]
Options Trading Strategies
Roblox Stock May Have Bottomed
For months, the deep discount in Roblox (NYSE:RBLX) has beckoned to bottom fishers. But so far, trying to nail the low has resulted in bruised egos and battered accounts. The selling has been relentless, and there have been too many failed bounces to count. RBLX stock has cratered 85% from peak to trough in the largest […]
3 Of The Most-Shorted Stocks With Bearish Charts
Once more, the bears in the market are successfully defending against would-be bargain-hunters this week. And right now, with stocks under increased pressure, the price charts in these most-shorted stocks are offering investors well-qualified bearish entries to trade with the trend. It has quickly turned into a third straight week where Wall Street’s bad actors […]
3 Energy Stocks Gushing Higher
The energy sector is on fire and just broke out The Energy Sector SPDR Fund (XLE) offers a diversified way to play Friday’s strong rally in energy stocks. Occidental Petroleum (OXY) is blasting through resistance with some heat. Halliburton (HAL) has one of the cleanest setups among oil services stocks. The time to buy energy stocks is now. The […]
3 Tech Stocks To Buy As Their Trends Reverse Higher
Sentiment is warming in the land of technology companies The market recovery reached two significant milestones Tuesday. First, the S&P 500 closed above its 200-day moving average, officially placing it back on the high side of all major averages. Second, the Nasdaq, which has seen serial underperformance, closed above its 50-day moving average for the first time in over […]
3 Growth Stocks To Sell Now Into Strength
Growth stocks are gross these days, so here are three to short The easy part of the oversold market bounce is over. What happens now will be the true test of whether the correction is genuinely finished or not. Growth stocks got caught up in the rebound, but I wouldn’t be too quick to dismiss […]
Options Volatility Watch
One Way To Take Advantage Of The Volatility In Tech Stocks
Tech stocks have the started the new year with elevated volatility and quite a bit of selling pressure. The most popular tech index, Invesco QQQ Trust (QQQ), is down 5% for the year and has seen a handful of large percentage moves already. One strategist is looking to take advantage of the volatility by using […]
Why December Is Shaping Up To Be A Very Volatile Month
It looked like we might coast into the end of 2021 on a calm and seasonally bullish note with the major indices up some 25% for the YTD. But, a new Covid variant and stubbornly-high inflation have thrown a wrench into that outlook. I think December will be unusually volatile, which equates to unpredictable, which […]
Market Volatility: Trade Cautiously But Without Fear
Being a market prognosticator often means spewing thoughts and opinions to create content well beyond the reality of underlying activity. I should know, after working with Jim Cramer — the sound bite-creating master — making table-pounding proclamations and outrageous predictions, all the while, under the surface, acting as a rational, risk-averse portfolio manager. I give […]
Is The Low Volatility Market At An End?
2019 can be roughly divided into two market regimes. There were periods of high volatility and market choppiness, notably in June, August, and early October. Then, there were the stretches of low and falling volatility – January through May and mid-October through the end of the year. It certainly seemed like January of 2020 was […]
Protection Against A December Volatility Spike
Stock market activity has essentially slowed to a crawl, and many traders are wondering if that’s it for volatility in 2019. Some traders are jokingly wondering if they should take the rest of the year off. It certainly seems like the market isn’t interested in action these days. There are certainly mechanical reasons for the […]
Options Trading
Debunking The Myth That 80% Of Options Expire Worthless
Nearly all of Options360 trades come in a type of spread. I believe it’s crucial for positions to have some element of premium collection in order to generate consistent returns. However, a persistent and pernicious myth regarding options is that 80% of all options expire worthless. The number belies the fact that most options get […]
Let Price Action Show You What To Do In An Approaching Bear Market
Traders have access to an overwhelming amount of market indicators. But does a trader really need any of these indicators to be successful at trading? At the end of the day, the price determines our loss or profit. Therefore, we should focus our research on price action rather than time lagging indicators or market fundamentals. […]
Understanding Risk-Adjusted Returns When Trading Options
My articles this week on calculating a Twilio (TWLO) profit and Capital One Financial (COF) loss continue generating questions on how profit and loss calculations are applied to overall returns? So, I’ll dive a bit deeper into the topic. It’s a well-known investment maxim that risk is correlated to reward. But, when it comes to […]
How To Make Triple-Digit Profits With Options
Once you start looking for option trades on your own, the most important thing you can do to find trades with triple-digit profit potential is staying up on the news. The market and stocks in general move up and down over time, and the key is to identify these cycles. You will learn to decipher […]
Why Successful Traders Make More By Trading Less
During my 25 years of trading and mentoring others, I have been dragged through the coals a few times. And by that, I mean I have: blown up a few trading accounts; had some massive gains only to watch them turn into worthless penny stocks, and; I even had one trade based around the volatility […]
Options Trading Basics
The Many Uses Of Option Delta
In an option chain, the delta for a given option strike price can vary from -1 to +1. Call options have a positive delta for option buyers somewhere between 0 and +1. Calls increase in value when the underlying increases in value. Put options have a negative delta somewhere between 0 and -1 as Put […]
Trading Options 101: A Beginner’s Guide
“What is an option?” This may be a question you’ve asked yourself before. If so, options trading might be a suitable investment for you! An options contract offers the buyer the opportunity to buy or sell the underlying asset depending on the type of contract they hold. Unlike futures, the holder is not required to […]
Death, Taxes, And Time Decay
Few things are certain in life. But as the old saying goes, there is nothing quite so certain as “death and taxes”. As an Options Trader, I would enthusiastically add option time decay to that list. Options offer traders and investors more leverage and risk mitigation than just purchasing shares outright. For example, if I were to […]
Are You An Options Buyer Or An Options Seller?
Options are an increasingly popular financial product that gives traders numerous ways to manage risk while significantly leveraging capital. They are a powerful trading “tool” that can be bought, sold, and combined in a seemingly limitless number of ways to achieve a specific objective. One of the bigger questions for new — and even experienced […]
How Do Options Work? Learn The Lingo, Pros, And Cons
Options trading gets a bad rap for being complicated and risky. But investors don’t seem to care, as options are becoming quite popular. When done right, becoming an options trader can actually ease the risk of owning stocks and generate extra cash for retirement. If your interest is piqued, you might be wondering, “How do […]
