Options Trading
The first—and perhaps biggest—challenge of options trading is understanding what an option is.
An option is a contract giving you the right, but not the obligation, to buy or sell a specific security at a specific price over a specific period of time. After that period of time has elapsed (known as “expiration day”), the option ceases to exist.
A call option gives you the right to buy the security.
A put option gives you the right to sell the security.
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Options Trading Post Archives
Using Buy-Writes to generate income is a safe way to create yield in this market—it’s as close to free money as you can find.
They say, “Be greedy when others are fearful.” With that in mind, I’ve built an options-based portfolio using only 5 big bank stocks.
Options trading may seem like it’s riskier than buying stock but selling LEAPs can actually reduce the overall risk in a position.
The options market is vastly different now than it once was, thanks to computers. You can’t compete with algorithms, so what do you do?
Use these strategies against any of your equity or index holdings when you want to start hedging a portfolio with options.
Buying or selling LEAPs puts can benefit investors who want longer-term contracts with less volatility than shorter-dated options.
Writing covered call options is a great way to boost your yield on stocks you already own, and involves a lot less risk than most investors think.
Using my unusual option activity scanner to identify how sophisticated hedge funds are trading is a powerful tool for identifying trends.
Much like home and auto insurance, buying put options is a way to protect your portfolio from sudden disaster. Here’s how it works.
Options trading can often be dismissed as too risky or too confusing. But it’s time to expose some of the five biggest options trading myths.
Iron condors are a low-risk, yield-creating options strategy to net a quick profit. Here’s how to execute an iron condor trade.
Investors are always looking for the latest and greatest trading strategy. Unfortunately, many overlook my favorite options strategy to generate premium regardless of market direction.
Wall Street seems divided on Tesla stock on the heels of a massive run. Here’s how to put a bullish or bearish options trade on TSLA.
Gamblers may be familiar with the Martingale strategy of doubling down on losing bets. But that can be a dangerous investing approach.
Want to know how the big institutional investors use options? Here is an example of how one trader spent $132 million on three tech stocks.