One of the numerous strategies available to traders are vertical spreads. Credit spreads come in two varieties: the Bear Call spread and the Bull Put spread. This article will cover the Bear Call Spread …how they are constructed, how much can be gained, as well as how much capital can be lost. We will talk about Bull Put spreads in a … [Read more...] about Vertical Spreads: Introducing the Bear Call Spread
SPX and SPY are two very similar instruments from which a trader can choose. Today we will talk a bit about the similarities and differences between the two. What is SPX? SPX is the nickname for the Standard and Poor's 500 Index. It is based on the 500 largest companies whose stock trades on the NYSE or NASDAQ. A list of the 500 … [Read more...] about What’s the difference between SPX and SPY Options?
A diagonal spread, also known as a time spread, may be a strategy you would like to implement into to your trading arsenal. Today we will discuss how a diagonal spread is created. We will also discuss some of the advantages and disadvantages of a diagonal spread. A diagonal spread is a strategy which occurs when two options are bought … [Read more...] about What is a Diagonal Spread or Time Spread?
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?
One of the advantages of an option based approach to trading is the ability to capitalize on trades that have a statistically well-defined high probability of profit. When events occur with predictable regularity, the knowledgeable option trader can effectively increase his odds of success. One of the most reliable and reproducible … [Read more...] about Trading Options Around Earnings Releases, Part I
Did you know that certain options have special tax treatment? The IRS has favorable tax treatment for anything termed a "IRS Section 1256 Contract." These are: Regulated futures contracts Foreign currency contracts Non-equity options (broad-based stock index options (including cash-settled) Debt options Commodity … [Read more...] about Tax Advantaged Options
You insure your house. You insure your car. Do you insure your portfolio and/or your positions? There are many differences of opinion among traders as to the benefit of insurance on your positions, or your overall portfolio. This article will touch on some of the benefits of purchasing insurance as a hedge to reduce risk to the … [Read more...] about How Put Insurance Can Benefit Your Portfolio
Dan Harvey is a well known options trader who specialized in Iron Condor trading for many years. Dan had an article published about him in SFO magazine in 2008. Over time, Dan noticed several problems with Iron Condors so he modified them to address their shortcomings. The new version was a weird looking Iron Condor so Dan called it a … [Read more...] about The Reverse Harvey