To be a successful option trader, an investor naturally has to pay attention to the prices of options. It is not enough to merely watch the option prices, selling when the price is up and buying when the price is down. Informed options investors will study and analyze their positions based on the Greeks. The Greeks are the indicators of how an option moves based on the outside components of the option.
Back Testing and Dollar Cost Averaging
OK, so you notice a statement regarding a potential investment that says, “our strategy has been back tested”, and wonder what does that mean. Very simply, back testing is using historical data to determine the results of an investment strategy had it actually been applied in the past.
You should learn options trading
I meet at least 1 person per week that asks me about PowerOptions, and I always get the same question after my introduction; Isn’t option trading risky? People on the street seem to all have a friend or neighbor who told them some horror story about losing everything in the options market.
Stock Investing Research
Not sure about the fundamentals you are using with your stock investing research? Good stock investment strategies always include some consideration of the stock technicals and stock fundamentals.
Option Trading Risks
You should know the risk of every trade before you make it!
Hedge Investments with Spread Trading
Vertical spreads offer investors the opportunity to profit on an underlying security without owning the stock and leaving themselves open to large risks. Of the many stock investment strategies, there are only four Vertical Spreads: two credit spreads (Bear-Call Credit Spreads and Bull-Put Credit Spreads) and two debit spreads (Bull-Call Debit and Bear-Put Debit). But which spread should you choose?
Triple Witching and Quadruple Witching
Investors who are new to the stock option investing markets may hear frightening tales of the dreaded Triple Witching Hour or worse, The Quadruple Witching Hour. Boo! Spooky language! However, there is nothing to be afraid of. These terms simply describe a quarterly event wherein several types of derivative contracts expire on the same day. This typically happens on the third Friday in March, June, September, and December.
CBOE VIX Index Options Introduced
We all worry about the possibility of a large catastrophe at one time or another. When we see the devastation of Hurricane Katrina, Tsunami’s, terrorist plots or recent mining disasters we reflect on what we would do in such a situation. Is there some way you can insure your personal stock portfolio from such catastrophes?
Puts with a dividend twist
Selling put options is one of the more popular income generating strategies used by options-savvy investors. Generally, the strategy involves selling an Out of the Money (OTM) put on a stock on which you are bullish. This means the price of the underlying stock is higher than the strike price of the put option. The option may be 5-10% OTM at the time it is written.
The Three Horsemen of Income
There are three popular options strategies for generating income, each of which allows investors to collect a premium while adding protection to their portfolios. The three strategies-best used in stagnant to bullish market conditions-are: