Last week we looked at delta — one of the most important Greek letters for options traders. Delta is significant because it captures the expected change in the option price deriving from a unit change in the underlying price. So, a delta of 0.75 means that if the underlying increases by $1, the option will […]

Sometimes bad things happen to good stocks. And when this happens, good stock trades can quickly become broken stock trades. Just like a rising tide lifts all boats, when the tide goes out, the boats go lower. Massive market sell-offs show no mercy, are not selective, and take no prisoners. What can you do when […]

Last week we introduced you to options Greeks, indispensable tools for any serious option trader. Because the price of an option is influenced by several variables, it’s important to isolate the effect of each variable on price. This helps us understand the impact a change in interest rates, underlying asset price, volatility, and time-to-maturity can […]

If you’re familiar with options trading you’ve probably heard about the Greeks. Not the folks from Greece, but the Greek letters that are often used to measure dimensions of risk involved in an option position. Before we dive into options Greeks, let’s review some basics about contracts. An options contract defines basic features of an […]

2013 was one of the best years ever for stocks as the Federal Reserve has been pushing investors into riskier assets due to a lack of yield deriving from low interest rates. At the end of the last week, the S&P 500 index was accumulating (or “amassing”) a gain of 26.9%, marking the fifth year […]

McClellan Oscillator is a popular market breadth indicator developed by Sherman and Marian McClellan in 1969. It is also used by traders to make sense of short-term events in the stock market. The McClellan Oscillator is computed by subtracting a 39-day Expnential Moving Average (EMA) from a 19-day EMA. Oscillator = (19 Day EMA of […]

There’s only one thing constant in the world — change. But stock markets are simply on a different level. The changes in the stock market not only happen every day or every minute, but every second!  By nature, the stock market is dynamic and unpredictable. Although, market conditions may differ from one industry to another […]

Calendar spread is a strategy which traders can use to profit from the difference in the time decay between two options in the short term and profit from market volatility in the long term. Sounds too good to be true? Well, calendar spreads are real and a lot of traders are in fact using calendar […]

Whatever the result of a fundamental analysis, you should never open a position in an asset without first gauging the market sentiment. Successful investments have three ingredients: a good assessment of the economic or fundamental situation; allowance for leverage; and good timing. If you have a proper assessment and leverage is involved but timing isn’t correct, you’re set for […]

We’re entering that special time of the year once again – the Christmas season! Why is that so special? Christmas is a magical time when everyone becomes more sensitive, tranquil, and in particular, more optimistic. During this time not even stocks escape the overall optimistic stance; they are usually buoyant during the weeks leading up […]