The value of an option tends to decay as expiration approaches. Discover what is theta in options, and learn about three options trading strategies that target time decay, also known as theta decay.
Vertical spreads are fairly versatile when taking a directional stance. But what if you're stuck in a range-bound market? Learn about iron condor strategies.
What is a spread trade? It depends on the products you trade. For a stock trader, it could be a pairs trade, and for an option trader, there are plenty of ways to put on a spread trade.
You have a losing trade but don’t want to sell. Learn about rolling a losing call option and other strategies to save a losing trade.
Your risk-management strategy could decide whether you survive the next market turn. If you don’t have a trading plan in place, here are some ideas to help you get started.
Earnings season can create volatility in price movement. Learn how to spot potential options trade candidates by assessing straddle price versus average earnings moves.
Diversification isn’t just about stocks, bonds, and cash. When hedging risk for an options portfolio, think price, time, and volatility.
With many options trading strategies to choose from, how do you find the right one? Consider a three-step process to help with your decision.
Options straddles and strangles are a way for advanced traders to get long or short exposure to volatility (vega), but the volatility needs to be weighted against time decay (theta). Here are the basics.
Option traders know volatility can increase leading up to a company’s earnings report. But it can also dive quickly after an earnings announcement. Know what to keep an eye on before making those earnings trades.
Learn how weekly stock options can help you target your exposure to market events such as earnings releases or economic events.
Consider these six strategies for bite-sized trading
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.
When faced with high volatility, many options traders turn to these five strategies designed to capitalize on elevated volatility levels.
Traders tend to equate high volatility with fear. But volatility can also mean possible trading opportunities. So, instead of avoiding high volatility, learn to use it in your options trading.
No matter what you trade or what the market is doing, you need to have a game plan. It can be as simple as creating a checklist to follow every day.
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.
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.
Some vertical spreads have the same looking risk profile. There's a reason why that may be the case. Here's an example of a vertical debit and credit spread options trade.
The global foreign exchange (FX) market is deep, liquid, and traded virtually around the clock. If you’re an option trader in search of a new asset class to trade, consider options on currency futures.
thinkorswim Web is the TD Ameritrade streamlined, web-based options trading platform that lets you trade wherever you have an internet connection.
Looking to pick stocks worth trading? You can lay the groundwork for a sound stock selection strategy with a few relatively simple components.
The monthly U.S. Employment Situation report—commonly called the jobs report—is perhaps the most closely watched fundamental indicator for traders and investors. Here’s why.
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.
Earnings season can be a time of higher-than-typical volatility, which can mean an increase in risk as well as opportunity. Learn some of the options trading strategies you might use during earnings season.
Once you’ve mastered the basics of margin trading, you might want to learn how different trader and investor types use it. It can depend on your objectives, risk tolerance, and the products you trade.
Vega can show you how much the dollar value of an option changes for every one percentage point change in volatility. But traders often confuse vega with volatility. Knowing the right way to use vega can help you come up with an options trading strategy.
thinkorswim has developed an interface dedicated to researching the effects that earnings announcements have on the prices of stocks and options.
Treasury bonds are boring, right? Wrong. For traders, they represent a market that can be bigger than stocks.
Calendars and butterfly strategies may look similar but they have their differences. Why would you choose one over the other?
Traders sometimes talk glowingly about thrilling options trading strategies without considering the risks. There are some alternative strategies such as short out-of-the-money verticals that you could consider to better manage your risks.
Return on capital when trading options is different than return on capital when managing investments. Here’s what return on capital means to an options trader.
When developing an options trading strategy, you might consider whether a trade is risk-defined, has positive theta, and is "high probability".
Learn about butterfly option spreads and how they differ from iron condors, plus an explanation of a butterfly option strategy.
TDA Network from Trader TV on thinkorswim® may give you many strategy ideas during the trading day. Watch and listen to learn about making a trading plan, analyze trades, paper trade, and then consider making a trade.
The sensitivity of option prices to changes in time, volatility, and the price of the underlying are commonly referred to as “Greeks.” As you prepare for earnings season, here's an overview.
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.
Consider these options strategies designed to increase your overall odds.
Options on futures are quite similar to their equity option cousins, but a few differences do exist.
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 about gamma, which some traders consider the positive side of negative theta.
Can't decide how long you want to commit to a position? Understanding strategy mechanics can help you align trade duration with your attraction.
Know what you're getting into before putting on that option trade—avoid surprises by educating yourself about the risks and oddities of assignment.
Learn some of the option trading alternatives you can use during earnings season.
The sensitivity of option prices to changes in time, volatility, and the price of the underlying are commonly referred to as “Greeks.” Here is an overview of
How to tweak a butterfly when you have strong directional bias, time to expiration is short and you want to squeeze as much as you can out of your position.
Overtrading can be a killer to your P/L. The trick is to trade
consistently and always know what the markets—and your positions—are doing.
Learn how an trading an iron condor can be an effective options strategy during earnings season.
Learn how to increase the flexibility of your existing options strategies with weeklys: options that move quickly and live for about a week.
The DOL has decided to allow trading options in IRAs—learn more about strategies that can be used to manage risk and potentially generate income.
Trading low volume, high volatility swings during the holidays takes practice—start with overnight markets that have similar liquidity and price-movement.
The greeks option traders use are loved by many, but understood by few. Know the false “truths” about option greeks to better manage your trades.
When will a stock trend end? There are a few stock chart indicators that make spotting trend reversal warning signs a little easier.
Volatility’s tendency to level out after a spike can present strategy opportunities, especially selling strategies found with strangles and iron condors.
Maximizing the risk/reward of a defined-risk trade—how to increase the risk-to-reward profile in short vertical spreads.
Turn conventional investing wisdom on its head and don't do what countless others have tried before you. Good habits and knowing what not to do are a must.
Expand option market learning to weekly double calendars. They can increase in profitability if implied volatility rises.
Consider option delta as one way to narrow the mathematical range when choosing an iron condor strike price.
Only pros care about interest-rate trading, and bonds are boring, right? Not so fast. There’s more to them than meets the eye. Pros don't have all the fun.
Trading earnings announcements can be a fool's game. When volatility is high, trends can break after a company announces. Consider a few volatility tricks.
Not all advice is equal. We break down four classic trading adages-turned myth to examine their relevance, and perhaps their accuracy.
You may have heard that trading is a giant conspiracy by the "1%" who make all the money. In truth, the market doesn't care. Here are some practical rules.
If the quants are making all the money these days with high-frequency trading, what’s it gonna take to compete? Beat them at their own game.
Without stock and options volatility, there are no trading opportunities. So to revere it rather than fear it–you need just need to “get it.”
Before buying or selling call and put options, check the alternatives. The vertical spread is a simple solution to the problems short naked options pose.
Diversification approaches for active traders to hedge non-systematic risk across spreads, including directional risk and time and vol.
There's a camp of traders who think a stock's next move is about as predictable as a coin toss. Just take your stock-picking hat off for a moment and focus.
Option strategies for more potential profit, using undefined-risk trades that draw roots from their defined-risk cousins.
Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.
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