With an increase of more than 30 percent in the S&P 500 during 2013, no one can blame the market for being stuck in the trading range this year. After five years of  steady increases, a correction may be approaching soon. The signals are mixed so far: Although the financial crisis is behind us and the […]

Sometimes, the prospects for a stock are not very good. You might want to open a short position on a stock when the price is too high relative to earnings, when economic prospects deteriorate, or simply when you believe a stock will suffer some selling pressure. But the availability of short selling may be limited […]

Let’s talk today about another way to hedge your stock portfolio against a major move down, albeit indirectly. We can do this by using options on the CBOE Volatility Index (VIX) in the form of a vertical call spread. The VIX is an index which provides a measurement of implied volatility in the S&P 500 […]

Over the last few months we have examined the Greek letters that make the life of option traders much easier. Delta, gamma, rho, vega, and theta are highly useful tools that correlate dimensions of risk in the price of an option to important factors such as the price of the underlying asset, interest rates, volatility, […]

The U.S. economy has greatly improved since the peak of the financial crisis with the financial markets recovering all losses and rising to record all-time highs. The $85 billion asset purchase program expanded the monetary base by trillions of dollars in just a few years, has contributed to the financial enthusiasm. The real recovery hasn’t […]

Every now and then it’s wise to review some of the basic elements in the options working method. Today I am going to review what happens when an-in-the-money option turns into the underlying asset, long or short (i.e., bought or sold,) through exercise and assignment. This happens in two ways, depending on the style of […]

Over the last month we have discussed the main options Greeks that an option trader should look at. We started with delta and gamma, which are related to the change in the option price due to changes in the underlying price. After that, we explored vega and rho, which relate the price of an option […]

Over the last few weeks we have been looking at options Greeks, invaluable tools for serious options traders. Greeks measure the sensitivity of the price of an option to a change in a specific variable. We already explored delta, gamma, and vega. Today we focus on rho. Rho is a measure of the change in […]

In recent articles we covered delta and gamma, important Greeks that option traders should look at before trading options. Both delta and gamma are related to the sensitivity of an option’s price to changes in the price of the underlying asset. The difference between the strike price of an option and the price of the […]

Is the long anticipated Correction upon us? Is the Bull run over, at least for now? Are you tempted just to get to cash and be safe? Maybe, maybe not.  One thing is certain, the only thing worse than buying at the top is selling at the bottom. And you’d sure hate to get out […]