If you’re thinking of legging in to options spread strategies, know the pros and cons before diving in.
Suppose you buy a call option at a given strike price. Now what? The Theoretical 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.
When stock prices keep going up, at some point they tend to fall. But you don’t know when. If you’re trading stocks that have gone up in price, you might want to consider options strategies such as time strangles, back/ratio spreads, and rolling collars as a potential protective measure.
Diversification isn’t just about stocks, bonds, and cash. When hedging risk for an options portfolio, think price, time, and volatility.
Considering options trading? Start with the basics of puts and calls and how to create single-leg strategies with call and put options.
Learn how candlestick chart patterns can help you decide strategy, options strike prices, and expirations. We came up with three ideas for you to consider.
Trying to decide which options strategy, strike price, or expiration date to trade? If capital efficiency is one of your criteria, consider return on capital (ROC).
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.
Can you use call options as a substitute for long stock? If you’re a qualified account owner, yes. Learn about buying stocks versus buying calls with the stock replacement strategy.
Protective puts are one way to hedge stocks against a significant price drop. But investors should consider factors such as time decay and volatility.
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.
Implied volatility and vega both measure volatility but they have some differences. Here’s some insight from an education coach at TD Ameritrade.
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.
Selling covered calls and cash-secured puts can help investors generate additional income, increase their probability of success, decrease their volatility of returns, and lower their overall risk when compared to buying stock.
When faced with high volatility, many options traders turn to these five strategies designed to capitalize on elevated volatility levels.
When you make an options trade, you’re not typically locked into it until expiration. You can place an order to close it out most of the time. Here are three things to ask yourself when considering an options exit.
When your stock options trading strategies aren't working as expected, it could mean you have to revisit the strategy, change your trade position sizes, or tweak a few strategy parameters. Here are some ways to fix the problem.
When trading options on futures contracts, the number of choices available—delivery months and options expiration dates—can be overwhelming. Follow the volatility curve to help you whittle it down.
Should you switch from trading long options strategies to short options strategies when volatility levels are high? Sometimes prices are high for a reason.
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.
Trading a stock around earnings day isn’t always simple. There tends to be volatility risk. It also helps to really know the company’s fundamentals.
Learn how a collar strategy—a covered call and a protective put—might be a way to manage stock risk.
When volatility falls, many option traders turn to these five strategies designed to capitalize on depressed volatility levels.
Looking for volatility exposure? Learn about volatility products including VIX options.
Learn the difference between implied and historical volatility, and find out how to align your options trading strategy with the right volatility exposure.
Selling call and put options can be risky, but when used wisely, experienced traders can use this strategy to pursue their investment objectives. Learn the basics of shorting options.
Beta, a method of measuring an investment’s volatility relative to the broader market, is one way to gauge risk. It works even better when you remember to re-measure.
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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.
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