If you’re shorting stocks, there’s a way you can do it while protecting your upside risk. Using an option spread, the short stock position will be protected during the lifetime of the derivatives. The strategy can also earn a small amount of income at the outset of the trade. Here’s a rundown on using short collars.
Education
Options trading can often seem like a complex maze, but one strategy stands out for those with a bullish outlook on the market: the bull put credit spread. This multi-leg, risk-defined strategy has limited profit potential but can significantly benefit from an increase in the underlying asset's price before expiration.
IV crush is a phenomenon that occurs when implied volatility (IV) drops significantly after an event or earnings announcement. This can cause option prices to decline, even if the underlying stock price remains unchanged. Why Does IV Crush Happen? IV is a measure of the expected volatility of a security over a period of time.
Options trading can be a great way to generate income, reduce risk, or speculate on the future direction of the market. However, it is important to understand the risks involved before you start trading options.
The world of options trading can be both exciting and lucrative for investors who know how to navigate its complexities. Among the many tools and strategies available to traders, the Put Call Ratio is one of the most valuable indicators. In this blog post, we will discuss what the Put Call Ratio is, how it's calculated.
Options trading strategies can provide opportunities to profit from short-term stock movements while managing risk. It's essential to understand the risks and rewards associated with each strategy and to consider factors such as transaction costs, taxes, and liquidity.
As an investor, you're probably familiar with the traditional buy-and-hold strategy, which involves purchasing a stock or other security and holding onto it for an extended period. Leap options offer a compelling alternative that allows you to capitalize on long-term growth while potentially reducing your investment costs.
Options trading strategies have the potential to be highly lucrative, but they can also be incredibly complex to figure out. Unlike traditional stock trading strategies, options trading introduces numerous variables, such as strike price, type, expiration, delta, gamma, and volatility, among others.
Bearish pressure on a stock can generate profits for short sellers. It can also earn money for option traders. Using a bear call spread, a net premium is earned, and this income will be pocketed if the stock makes just a modest decline.
A credit spread option is an act of taking two or more options and selling the premium they produce. Yes, that sounds confusing. I'll explain, but first, let's explore quickly the concept of writing a contract. In this post, we will explore how traders can make monthly income trading options via spreads.
