The Options Chain Sheet

We walk through each section of a chain sheet so you can better understand what to look for when evaluating an option trade. In this example we look at a chain sheet for Microsoft Corp. (MSFT) for demonstration purposes.

Reducing Time-Value Erosion by Adding a Credit Spread

Time value erosion is a big problem for option traders. In some cases it makes sense to add a credit spread to the position to limit that disadvantage.

Understanding Put Options

Using puts, it is possible to invest and benefit from declines in the stock market or in individual stocks – without ever owning them. We show you the process for analyzing a potential put candidate and walk you through how to purchase a put.

Choosing At-the-Money, In-the-Money or Out-of-the-Money Options

Options are classified as “in the money,” “at the money” or “out of the money.” Each of these phrases has a distinct meaning and each option strike price will fall into one of the three categories. [VIDEO] Choosing At-the-Money, In-the-Money or Out-of-the-Money Options If you will keep in mind that options convey rights to the … Continued

Option Trading Strategy – Calendar Spread

Calendar spreads are a great modification of the diagonal option spread strategy. The calendar spread is useful when you are more uncertain about the direction of the market and want to increase the effectiveness of the hedge during periods of market volatility. [VIDEO] Option Trading Strategy – Calendar Spread A calendar spread consists of two … Continued

Increasing Profits with Covered Calls on LEAPS

Many investors trade covered calls on stocks and ETFs, but you can amp up your trading returns by trading covered calls on LEAPS.

Using LEAPS Options to Avoid a Value-Trap

LEAPS options can be used to buy a value stock with more leverage and therefore less money invested. It can be a good way to create diversification.

Using Option Greeks: Theta

How sensitive an option is to the passage of time is called “theta.” In this series we will be looking at theta and will discuss why option traders pay attention to theta.

V-Reversals and Legal Short Selling

The US government seems to be successfully turning the tide of investor sentiment in the stock market today. The Securities and Exchange Commission has taken the attitude that if you cannot convince the bears to become bulls then just ban them from participating in the market. The SEC did this by taking a very unusual … Continued

Using Option Greeks: Implied Volatility

Implied volatility can be used to adjust your risk control and trigger trades. The concept of implied volatility is simple to understand but hard to predict. In this article we talk about how IV changes prices and why this matters to investors.