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.
The recent rise in volatility means it could be time to talk about strategies designed to capitalize on elevated volatility levels.
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?
Learn how the VIX, VIX futures, VIX options and the VVIX work together to help traders increase market awareness and make more informed option trading decisions.
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.
As the front-month leg of a calendar options spread approaches expiration, a decision must be made: close the spread or roll it.
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.
Calendar option spreads can be effective during times of low volatility. Here’s how to get started trading and rolling them.
Learn how weekly stock options can help you target your exposure to market events such as earnings releases or economic events.
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.”
Find market maker moves when researching trades with earnings announcements. Just use this handy TD Ameritrade thinkorswim® trading platform tool.
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.
Learn how to spot potential trade candidates by assessing straddle price versus average earnings moves.
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).
Investors and traders alike can benefit from options by learning how they work and how to apply this knowledge to meet their investing goals.
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.
Monitor strong spurts of volume and inflated premiums for potential option trading opportunities. TD Ameritrade tools can help.
Weekly options were introduced by the Chicago Board Options Exchange in 2005. Now they’re all the rage, especially as more traders use them to position for earnings releases.
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...
Just when you though you've heard it all about covered calls, along comes a new reason for traders to rethink this old dog.
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.
Calendar spreads can help you turn options time decay into profit.
The calendar spread is another building block for spread traders. Though it's designed to profit when a stock goes nowhere, there's more to 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.
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.
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
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.
The information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. 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.
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. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2019 TD Ameritrade.