Do the headwinds of time decay turn you off from buying single options on volatile stocks? Find out how you may be able to turn the headwinds into tailwinds by trading those stock moves.
We often hear about traders selling options. But why (or when) might a trader buy options?
Trading options? Sometimes the bid/ask spread is nice and tight, and sometimes it’s not. Here’s what traders and investors should know about order types and slippage.
Learn how weekly stock options can help you target your exposure to market events such as earnings releases or economic events.
When trading options you will need to consider price, time, and volatility at the same time. That means understanding the interplay of a few options greeks and how they play off one another.
Is the market pricing in a greater-than-typical move in a stock? Check the Market Maker Move indicator on thinkorswim®. Its magnitude can help inform your trading decisions.
Calendar options spreads can be effective during sideways markets and during periods of low volatility. Here’s how to set up and roll a calendar—and a rundown of the risks.
The value of an option tends to decay as expiration approaches. Learn about three options trading strategies that target time decay (“theta”).
When faced with high volatility, many options traders turn to these five strategies designed to capitalize on elevated volatility levels.
Learn how the VIX, VIX futures, and VIX options work together to help traders increase market awareness, make more informed options trading decisions, and employ trading strategies.
If an options position isn’t going the way you thought it would, you might consider rolling it using the thinkorswim Strategy Roller®. It could take out some of the guesswork for when and how to roll options positions.
The Market Maker Move (MMM) indicates the expected magnitude of an upcoming move such as earnings. It can provide some useful info that you can use when trading options.
How do you know when a consolidating market is about to trend? Consider using the TTM Squeeze indicator to help you decide if a market is going to switch.
Suppose you buy a call option at a given strike price. Now what? The Theo Price tool on thinkorswim can help you assess what it could mean for your trade if the underlying stock reaches your price target by a certain date, if it goes the other way, if implied volatility changes, and more.
There's no way to predict bear markets. Each one is different from the next. But these options trading strategies can prepare you for unexpected market events.
Traders should become very familiar with margin trading, especially since it comes in many forms. Learn about the different types of margin accounts and how you can climb up the margin ladder and make your way up to portfolio margin status.
Trading options in an IRA is possible but has its caveats. For those who qualify, here are some options trading strategy ideas that could open up some possibilities you never thought existed.
Selling covered calls is a neutral to bullish trading strategy that can help you make money if the stock price doesn't move.
Even your best trading plans can change because options greeks such as delta, theta, and vega are constantly changing. if you have a portfolio with many positions, managing trades can be difficult. These guidelines can help keep you on track.
As stock options get closer to their expiration date, options prices can change quickly. Understanding options gamma could help you manage your stock options positions better.
A small trading account shouldn’t stop you from trading like traders with large accounts. Here are three options trading strategies to let you trade lower-priced stocks with similar risk/return as more expensive stocks.
Vertical spreads are a common choice for options traders looking for a flexible defined-risk strategy. But how do you choose among strategies? Here's a handy checklist to follow.
Delta contains information that matters most when you are looking for a profit. But there is more to delta.
There are different ways a basic options strategy can offer some protection for a limited period of time for most stock portfolios. One strategy you could apply is using index options as a hedging tool.
Volatility skew has to do with the difference between put and call volatility. Sudden changes in volatility skew levels can indicate what the market may be anticipating.
Can straddles be used in an options strategy around earnings announcements or other market-moving events? Yes, but there are risks and other considerations.
Learn how a covered call options strategy can attempt to sell stock at a target price; collect premium and potentially dividends; and limit tax liability.
Big changes in stock prices can happen anytime, which is why option traders need a risk management strategy in place to withstand persistent rallies and potentially profit if and when a selloff happens.
Calendars and butterfly strategies may look similar but they have their differences. Why would you choose one over the other?
Options traders with smaller accounts may be able to manage their portfolios like a portfolio manager. Long call verticals, short put verticals, and long call diagonals can help expand an option trader’s thinking beyond their trading account and look like a pro.
Maybe volatility is low and you believe a breakout is about to happen. But you don’t know which direction price will move. Or maybe you believe the markets are high and you don’t know when they might fall. What options strategies could you trade?
Losses can creep up on you quickly. As time passes gamma could grow more than deltas, which is why you should keep an eye on gamma and delta. Find out about gamma scalping and managing a position’s gamma.
When trading options on futures contracts, you need to understand what you are trading. Know the contract specifications, know how the futures options are priced, and the differences in expiration between the futures and options.
Implied volatility usually increases ahead of earnings announcements and then drops after the news release. If you know implied volatility is going to drop after earnings reports, here are three options trading strategies you could trade.
It's your holiday vacation—the perfect time to log in to your account and make some trades, right? Here are some things you should consider.
Are you getting the most out of your iron condor stock trades? Double diagonals could help you do just that. Learn more about options trading.
Learn how to dynamically hedge changes in an option position’s delta in a process known as “gamma scalping.”
When stuck in a low-volatility environment, check out the term structure. You might consider alternative covered call strategies.
If you have a directional view on a stock price, buying a vertical spread might be for you. But deciding on strikes and strike widths requires some thought.
Learn the basics of put ratio spreads and how they can help you pursue your objectives.
Can't decide how long you want to commit to a position? Understanding strategy mechanics can help you align trade duration with your attraction.
How using Kurtosis to study abnormal market behavior—in particular how it explains the price behavior of options—can aid in your strategy selection.
Ready for a more advanced options trading strategy? We explain vertical spreads (credit and debit).
With gold futures prices swinging up and down, options traders may have an opportunity to exercise non-directional strategies like straddles and strangles.
Laddering price, volatility, and time can take covered calls to a new level—look to collect more premium and diversify across vol and time.
Why trading in high-priced stocks may be no riskier than their low-priced brethren, and how to calculate that risk with implied volatility.
The calendar trade is a strategy that belongs in every trader’s arsenal, partly because calendars are easily adjusted, and also handy for weekly options.
Potential strategies for a depressed VIX—When volatility is low, learn how to hedge a trader's version of "yield" by trading volatility as an asset class.
What’s a handy core options strategy that leverages time? The calendar spread. But there’s more to them than just buying and waiting.
Having trouble selecting a strike price for an options trade? Learn how the Risk Profile tool can help select options that align with your trading strategies.
Volatile markets are characterized by wide price fluctuations and heavy trading—just what active traders love.
If you’re in a position you can’t access while in a locked-limit scenario, consider constructing a synthetic futures contract to offset your position.
Consider straddle/strangle swaps to better position for earnings. Use option strategies and charting tools to help navigate these vexing volatility events.
With IRAs, plenty of stop signs tell you what you can and can’t do with options. Are there workarounds?
I was happy when CBOE VIX futures were added to TD Ameritrade’s thinkorswim® platform. So, it’s not running with the bulls in Pamplona. But I’m a trader...
Buy and hold may not be dead. But it’s no longer the straightforward process it was made out to be. Don't skip volatility analysis and probabilities.
Once you've learned the foundational option spreads—verticals and calendars—and what makes them tick, the next step is knowing when to use them.
Buying calls and puts is great when the stars align. For the spread trader, anything is possible. And the vertical spread is all where it begins.
We know stocks move up and down. But much of the time, they're range-bound. The calendar spread takes advantage of that at a fraction of the stock price.
Whatever your time frame, if you’re hedging with options here's a few tricks about how to size things up.
for thinkMoney ®
Financial Communications Society 2016
for Ticker Tape
Content Marketing Awards 2016
Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.
Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.
Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.
TD Ameritrade, Inc., member FINRA/SIPC, a subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2021 Charles Schwab & Co. Inc. All rights reserved.