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Gamma Scalping Intro: Synthetics, Put-Call Parity and Delta-Neutral

Gamma Scalping Intro: Synthetics, Put-Call Parity and Delta-Neutral

A recent article introduced negative theta—that is, options positions that lose theoretical value each day due to the passage of time. The article demonstrated how this theta “cost” actually provides a potential benefit in the form of long gamma. Some professional option traders will buy gamma and dynamically hedge it as the underlying moves, as a way of locking in ...

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Volanthology: A Tour of VIX and Other Volatility Indexes
September 15, 2017

Volanthology: A Tour of VIX and Other Volatility Indexes

When you hear the phrase "stock market volatility, what's the first thing that pops into your mind? If you're like many investors, you think of the VIX—the CBOE ...

Price Action vs. Price Erosion: The Positive Side of Negative Theta
September 7, 2017

Price Action vs. Price Erosion: The Positive Side of Negative Theta

Many traders tend to gravitate to options strategies with positive theta—those in which the theoretical value increases with the passage of time. Certain positive ...

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Got a Directional View? Here’s an Option Spread to Consider
August 31, 2017

Got a Directional View? Here’s an Option Spread to Consider

Directional trades, like long calls or long puts, offer you the chance to profit if you’re right about the direction of the underlying stock. But, having profits that aren’t ...

Do the Math: Calculating Risk and Potential Profit on Vertical Spreads
August 24, 2017

Do the Math: Calculating Risk and Potential Profit on Vertical Spreads

Many options traders say that they trade a consistent quantity when initiating vertical spread trades. And while this strategy might keep the contract numbers orderly ...

Term Structure and Covered Calls in a Low-Volatility Environment
August 17, 2017

Term Structure and Covered Calls in a Low-Volatility Environment

When summer trading is slow, and everyone’s either at the beach or wishing they were, implied volatility (IV) can get pretty low. For covered call sellers, lower IV means ...

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Hold Onto Your Floaties! New Swim Lessons with Video
August 7, 2017

Hold Onto Your Floaties! New Swim Lessons with Video

If you're a dedicated (or even an occasional) participant in our daily Swim Lessons broadcasts in the thinkorswim® platform, you understand how dynamic the market can ...

Going on Strike: Consider Widths when Buying Vertical Spreads
August 3, 2017

Going on Strike: Consider Widths when Buying Vertical Spreads

Experienced options traders understand how buying vertical spreads can help you take advantage of directional moves, but with defined risk. And because ...

Proportional Proposal: An Intro to Put Ratio Options Spreads
July 27, 2017

Proportional Proposal: An Intro to Put Ratio Options Spreads

Ready for a primer on put ratio spreads? Take a deep breath and let’s dive in. For options traders, basic spreads are typically created on a ratio of 1:1. ...

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Earnings Moves: When Being Below Average Might Be a Good Thing
July 27, 2017

Earnings Moves: When Being Below Average Might Be a Good Thing

Earnings announcements can be volatile events for the company reporting, and have the potential to propel the stock higher or lower depending on the results. Option ..

Piloting Your Options Strategy? Remember the Pre-Flight Checklist
July 20, 2017

Piloting Your Options Strategy? Remember the Pre-Flight Checklist

If you've ever flown a plane, or flown in a plane actually, you know that the captain doesn't step into the cockpit at the last moment, hit the "takeoff" button and sail off ...

Calendar Spreads: Options Strategy for the Dog Days of Summer
July 13, 2017

Calendar Spreads: Options Strategy for the Dog Days of Summer

Ah, summertime— a time of barbecues, lounging poolside on extended vacations. Perhaps it's time to kick back and open up a...calendar spread? A while back ...

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Swim Lessons: Trading Options During Earnings Season
July 6, 2017

Swim Lessons: Trading Options During Earnings Season

Earnings season is one of those times when stocks can see larger than normal moves. You also might see that the implied volatility has risen to unusually high levels ...

Swim Lessons: Collaring Your Stock for a Measure of Protection
June 29, 2017

Swim Lessons: Collaring Your Stock for a Measure of Protection

Even in the strongest of rallies, a stock can experience a pullback. And understanding that downturns are a natural part of any market doesn’t make them any more fun.

Who Adjusted My Options? And Other Corporate Action Questions
June 22, 2017

Who Adjusted My Options? And Other Corporate Action Questions

It seems like each month or so there's a major company announcement—a mega-merger, acquisition, stock split or a special dividend—but these are just the big ones ...

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Same Building Blocks, Different Products: Options on Futures Intro
June 22, 2017

Same Building Blocks, Different Products: Options on Futures Intro

While a good chunk of our Swim Lessons episodes feature equity options—options on stocks and stock indexes—we also like to feature options on futures ...

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