In the United States there are three types of margin trading accounts which are widely used. They are Regulation T margin, Portfolio margin, and SPAN margin. Portfolio and SPAN margin accounts usually offer lower margin requirements, which can allow the possibility of larger leverage to your trading account. Today we will discuss … [Read more...] about A Brief Overview of Three Types of Margin: Regulation T, Portfolio, and SPAN Margin.
Most traders follow a certain routine in preparation for the trading day. For example, one of the first things I do after turning on my computer and logging into my trading platform is to check to see what futures are doing for the various indices. This gives me an idea of what I might expect at the open. There is a further barometer … [Read more...] about Fair Value – What it Means for Options Traders
Comparing an option to an insurance policy can many times help to simplify your learning curve when it comes to options. What is an option? "An option is a financial derivative that represents a contract sold by one party (option writer) to another party (option holder). The contract offers the buyer the right, but not the … [Read more...] about How is an Option Similar to an Insurance Policy?
Price action trading can be defined in many different ways. For the purposes of this article, Price Action Trading is defined as a move in price either up or down on any and all charts in any market. You can use price action trading to scalp or swing trade. Price action trading does not use indicators such as Williams %R, Stochastics, … [Read more...] about Can Price Action Enhance Your Trading?
Let's say you have a fondness for organic, fresh juices, and you decide to open your own juice bar in the center of town. You secure reliable vendors for high-quality ingredients, purchase an industrial juicer, and open for business. Your juice bar is attractively furnished, bright cheery, and you have a startup investment of $100,000. … [Read more...] about Why is Diversification Important for Your Trading Business?
What is the VIX? "The VIX Index is an up-to-the-minute market estimate of implied (expected) volatility that is calculated by using the midpoint of real-time S&P 500 Index (SPX) option bid/ask quotes. More specifically, the VIX Index is intended to provide an instantaneous measure of how much the market thinks the S&P 500 … [Read more...] about The VIX: What Is It, and What Can It Mean for Your Options Trading?
As defined in Investopedia.com, the wash sale rule is an Internal Revenue Service (IRS) rule that prohibits a taxpayer from claiming a loss on the sale or trade of a security in a wash sale. The rule defines a wash sale as one that occurs when an individual sells or trades a security at a loss, and within 30-days before or after this … [Read more...] about What is the ‘Wash Sale Rule’?
Several years ago I recall a question that someone wrote to the CBOE's "CBOE - Ask the Institute", asking if there was a scientific way to manage iron condors, or any type of credit spread. They noted that from their observation, some used the Greeks (primarily delta), others used a percentage move away from entry point, etc. Their … [Read more...] about When is Trading an Art and Not a Science?
Have you ever had the feeling that you're just ready to hang up your trading hat and quit? It's happened to many traders at times, both novice and experienced. You are progressing along nicely with your trading plan, then you enter a time period where several losses in a row take away your confidence. It feels like you're getting … [Read more...] about When you’re ready to throw in the towel; what should you do?
Think or Swim Internals Chart Market Internals can be used to give you an overall feel of the market direction. The market internals are similar to a compass or the instrument panel on your car. The internals can give you a sense of the speed and direction of the market. The internals can give you the overall strength or weakness in … [Read more...] about How Market Internals Can Help You Read the Market