Out of The Money

How to Save a Bear in a Herd of Bulls January 7, 2019 3:00 AM   |  

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.

6 min read  |  thinkMoney Magazine
Portfolio Theory for the Little Guy January 7, 2019 3:00 AM   |  

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.

7 min read  |  thinkMoney Magazine
Calendar vs. Butterfly: The Ultimate Premium Smackdown January 7, 2019 3:00 AM   |  

Calendars and butterfly strategies may look similar but they have their differences. Why would you choose one over the other?

6 min read  |  thinkMoney Magazine
Small Trades: Formula for a Bite-Size Trading Strategy November 15, 2018 4:00 AM   |  

Trading success doesn't mean "going for broke," or searching for the next big thing. It's more like pacing yourself at the hippest restaurant in town.

7 min read  |  Options Trading Basics
Six Options Strategies for High-Volatility Trading Environments October 30, 2018 4:00 AM   |  

The recent rise in volatility means it could be time to talk about strategies designed to capitalize on elevated volatility levels.

3 min read  |  Advanced Options Strategies
Option Spread Order Entry: Options for Earnings October 18, 2018 4:00 AM   |  

Learn the thinkorswim platform's Order Entry tool and how multi-leg trades, or option spreads, can make sense for qualified traders during earnings season.

4 min read  |  thinkorswim Platform
Return On Capital: The Great Decider October 1, 2018 3:00 AM   |  

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.

3 min read  |  thinkMoney Magazine
Putting “Too Good to Be True” to Use October 1, 2018 3:00 AM   |  

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.

7 min read  |  thinkMoney Magazine
Pile on With Multi-Spread Organic Trading October 1, 2018 3:00 AM   |  

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?

8 min read  |  thinkMoney Magazine
Vol Whisperer: Volatility Watch October 1, 2018 3:00 AM   |  

The VIX often makes explosive moves. What do these types of moves mean?

3 min read  |  thinkMoney Magazine
Same Building Blocks, Different Products: Options on Futures Intro September 26, 2018 4:00 AM   |  

Learn the differences between equity options and options on futures contracts, and how experienced options traders can use futures options to enhance their trading.

4 min read  |  Futures
VIX Futures, VIX Options, and VVIX: Casting a Wide Volatility Net August 28, 2018 4:00 AM   |  

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.

7 min read  |  Futures
Body and Wings: Introduction to the Option Butterfly Spread July 31, 2018 4:00 AM   |  

Learn about butterfly option spreads and how they differ from iron condors, plus an explanation of a butterfly option strategy.

5 min read  |  Advanced Options Strategies
Options Volatility Q&A: VIX, Skew, and the Rule of 16 July 25, 2018 4:00 AM   |  

Do you follow the VIX as a volatility measure? Ever heard of the rule of 16? How about volatility skew? Learn how to apply these concepts to options trading.

2 min read  |  Options Trading Basics
Toppy Markets and Heavy Bottoms: Bullish Strategies For Under $1,000 July 16, 2018 3:00 AM   |  

Long call vertical spreads, short put vertical spreads, and call ratio backspreads are defined risk bullish option strategies with relatively low capital requirements that could offer upside potential.

7 min read  |  thinkMoney Magazine
Wanna Trade Your Retirement Account? July 16, 2018 3:00 AM   |  

You may be able to trade options in an IRA. Learn more about IRA options trading in this article.

5 min read  |  thinkMoney Magazine
Unpacking Gamma—Delta’s Evil Enabler July 16, 2018 3:00 AM   |  

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.

6 min read  |  thinkMoney Magazine
Vol Whisperer: Skew Basics July 16, 2018 3:00 AM   |  

What is volatility skew and how to use it.

3 min read  |  thinkMoney Magazine
Earnings: Volatility’s Siren Song—Save Yourself From Surprises April 23, 2018 12:00 AM   |  

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.

8 min read  |  thinkMoney Magazine
Futures Options Unpacked: Figuring Out the Pricing April 23, 2018 12:00 AM   |  

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.

7 min read  |  thinkMoney Magazine
Fixing a Good Trade Gone Bad: Four Ways To Save a Losing Trade April 22, 2018 6:04 AM   |  

You have a losing trade but don’t want to sell. Here are four option strategies you could use to fix your losing trades.

7 min read  |  thinkMoney Magazine
Decisions, Decisions: Understanding Option Probabilities March 28, 2018 8:00 PM   |  

Learn how option delta calculations and the Probability ITM (in the money) feature can help gauge the risk in an option position. Let TD Ameritrade guide you through the math to aid your decision making.

5 min read  |  Options Trading Basics
Options Expiration: Definitions, a Checklist, and More February 18, 2018 11:00 PM   |  

Options expiration day can be a time of volatility, opportunity and peril. Trading and selling options on expiration day requires an understanding of the process, here are a few things you need to know.

7 min read  |  Advanced Options Strategies
Think Like a Trader, Act Like an Investor: Principles of Hedging January 7, 2018 11:00 PM   |  

Making profitable adjustments to your stock portfolio can be tough. Learn more about three important metrics you can use to manage your investments.

7 min read  |  Advanced Options Strategies
The Non-System System for Smarter Trading: Options Strategies January 7, 2018 11:00 PM   |  

Consider these options strategies designed to increase your overall odds.

8 min read  |  Advanced Options Strategies
Option Collar Options: Rolling Up, Rolling Down, Rolling Out ... January 3, 2018 11:00 PM   |  

Learn how adjusting an options collar strategy—a covered call and a protective put—can help you manage stock risk.

4 min read  |  Advanced Options Strategies
Wearing a Collar? Here’s How and When You Might Adjust It December 27, 2017 11:00 PM   |  

Learn how adjusting a collar strategy—a covered call with a protective put—can help you manage stock risk.

3 min read  |  Advanced Options Strategies
Turn a Long Butterfly Spread into a Credit Spread? Break a Wing December 20, 2017 11:00 PM   |  

Learn how to turn a long butterfly spread—typically initiated with a debit—into a credit spread by adjusting one of the wings, aka a “broken wing butterfly.”

5 min read  |  Advanced Options Strategies
Looking to Buy or Accumulate Stock? Consider Put Spreads December 13, 2017 11:00 PM   |  

Traders and investors often use limit orders as a way of buying stock at their chosen entry point. Put spreads can be used to pursue similar objectives.

4 min read  |  Options Trading Basics
Derivatives With a Twist: Options on Futures vs. Equity Options December 6, 2017 11:00 PM   |  

Options on futures are quite similar to their equity option cousins, but a few differences do exist.

6 min read  |  Advanced Options Strategies
Double Calendars: The Low Volatility Trade with Two Peaks November 5, 2017 11:00 PM   |  

Are you an option looking for a strategy designed for a lower-volatility environment?

3 min read  |  Advanced Options Strategies
Forget Wall Street. Trust Yourself: Use Your Trading Tools October 1, 2017 11:00 PM   |  

Are you effectively investing your money? Millennials are among the smartest investors, but not all of them follow this important process.

8 min read  |  Options Trading Basics
Your Portfolio Has a Job to Do. Put It to Work: Core Positions October 1, 2017 11:00 PM   |  

Core positions are treated differently among investors and traders. Learn more about leveraging your trading portfolio and managing core positions.

8 min read  |  Portfolio Strategy
Neutral Spreads Get Tasty: Diagonals and Iron Condors October 1, 2017 11:00 PM   |  

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.

9 min read  |  Advanced Options Strategies
Gamma Scalping Intro: Synthetics, Put-Call Parity and Delta-Neutral September 21, 2017 12:00 AM   |  

Some option traders dynamically hedge positions, but doing so requires a basic understanding of synthetic positions and put-call parity.

3 min read  |  Advanced Options Strategies
Don’t Confuse a Global Portfolio with a Diversified One September 19, 2017 12:00 AM   |  

Don’t confuse a global portfolio with a well-diversified one. Learn the difference.

2 min read  |  Portfolio Strategy
Price Action vs. Price Erosion: The Positive Side of Negative Theta September 7, 2017 12:00 AM   |  

Learn about gamma, which some traders consider the positive side of negative theta.

5 min read  |  Options Trading Basics
Got a Directional View? Here’s an Option Spread to Consider August 31, 2017 12:00 AM   |  

Learn how to structure a trade designed for uncapped profit potential.

6 min read  |  Advanced Options Strategies
Going on Strike: Consider Widths when Buying Vertical Spreads August 3, 2017 12:00 AM   |  

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.

3 min read  |  Advanced Options Strategies
Black Swans: Part of the Wall Street Menagerie of Bulls and Bears July 31, 2017 12:00 AM   |  

Learn about “black swan” events and how you can attempt to protect yourself and your portfolio from adverse shocks.

4 min read  |  Portfolio Strategy
Earnings Moves: When Being Below Average Might Be a Good Thing July 27, 2017 12:00 AM   |  

Learn how to spot potential trade candidates by assessing straddle price versus average earnings moves.

6 min read  |  Advanced Options Strategies
Proportional Proposal: An Intro to Put Ratio Options Spreads July 27, 2017 12:00 AM   |  

Learn the basics of put ratio spreads and how they can help you pursue your objectives.

4 min read  |  Advanced Options Strategies
Capiche? Portfolio Margin Part 3: Profit, Loss, and Expiration July 24, 2017 12:00 AM   |  

Part 3 of our series on portfolio margin covers profit, loss, and what happens at expiration—eventually your position will expire, know what to expect.

3 min read  |  Margin
Look Before You… Get Assigned July 24, 2017 12:00 AM   |  

Know what you're getting into before putting on that option trade—avoid surprises by educating yourself about the risks and oddities of assignment.

7 min read  |  Advanced Options Strategies
A Short-Term Fling or Puttin’ On the Ring? July 24, 2017 12:00 AM   |  

Can't decide how long you want to commit to a position? Understanding strategy mechanics can help you align trade duration with your attraction.

8 min read  |  Advanced Options Strategies
Calendar Spreads: Options Strategy for the Dog Days of Summer July 13, 2017 12:00 AM   |  

Looking for opportunities amid a low volatility trading environment? Learn about calendar spreads.

4 min read  |  Advanced Options Strategies
Swim Lessons: Collaring Your Stock for a Measure of Protection June 29, 2017 12:00 AM   |  

Learn how a collar strategy—a covered call and a protective put—might be a cost-effective way to manage stock risk.

4 min read  |  Advanced Options Strategies
Swim Lessons: Option Melting and Theta Decay Strategies May 18, 2017 12:00 AM   |  

An option's value tends to decay as expiration approaches. Learn how to incorporate time decay ("theta") into a trading strategy.

4 min read  |  Options Trading Basics
Unbalanced Butterfly: Tilting the Odds April 17, 2017 12:00 AM   |  

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.

8 min read  |  Advanced Options Strategies
Markets Aren’t Normal and Neither Are You April 17, 2017 12:00 AM   |  

How using Kurtosis to study abnormal market behavior—in particular how it explains the price behavior of options—can aid in your strategy selection.

8 min read  |  Advanced Options Strategies
Vol Whisperer: VVIX and Skew—I’m Watching You April 16, 2017 11:00 PM   |  

Can you calculate fear? Certain market measures help traders determine when the market seems “fearful.” Learn to do this for yourself to better evaluate risk.

2 min read  |  Options Trading Basics
Ready to Go Vertical? Options Spreads with Versatility January 25, 2017 11:00 PM   |  

Ready for a more advanced options trading strategy? We explain vertical spreads (credit and debit).

4 min read  |  Options Trading Basics
Vol Whisperer: Volatility Unleashed January 8, 2017 11:00 PM   |  

If you have a futures account and understand VIX, you might be ready for a covered call in volatility—long /VX futures and short VIX calls.

2 min read  |  Advanced Options Strategies
What I Learned Not To Do: Direction, Time, and Volatility January 8, 2017 11:00 PM   |  

Managing risk variables you didn’t know you could control—lessons learned in 2016 about direction, time, and vol, and what mistakes to avoid this year.

10 min read  |  Options Trading Basics
It's Not You, It's Me: Recovering From Mistakes January 8, 2017 11:00 PM   |  

If you’ve got a losing trade, deal with it and move on—here's a recovery process designed to get you back on track if you make any one of four big mistakes.

5 min read  |  Trading Psychology
DIY Guide to Options Trading: Ask and Bid to Trade Options November 1, 2016 12:00 AM   |  

Investors and traders alike can benefit from options by learning how they work and how to apply this knowledge to meet their investing goals.

4 min read  |  Options Trading Basics
Covered Calls in the Fast Lane: Ladder Price, Volatility, and Time September 28, 2016 12:00 AM   |  

Laddering price, volatility, and time can take covered calls to a new level—look to collect more premium and diversify across vol and time.

8 min read  |  Advanced Options Strategies
Trading Futures: Futures Scalper’s Guide to the Galaxy September 28, 2016 12:00 AM   |  

Arbitrary entry and exit points in futures trading can be futile—learn how to place your trades using a price range based on volatility and probability.

8 min read  |  Futures
Three Things That Keep Traders Awake at Night July 5, 2016 7:50 AM   |  

These strategies to help you sleep at night by reducing your losses, reducing your effective cost, and reducing the possibility of assignment.

7 min read  |  Trading Psychology
Options Collars: Happy at the Bottom, Party at the Top July 5, 2016 12:00 AM   |  

Options collars offer an affordable stock hedge with reasonable upside, which can help you build a larger stock position with much less money.

10 min read  |  Advanced Options Strategies
The Myth of Delta Neutral (and Other Greek Tales) July 5, 2016 12:00 AM   |  

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.

7 min read  |  Advanced Options Strategies
Exploring Your Options: Knowing When to Adjust a Trade (Pt 2) June 23, 2016 12:01 AM   |  

Sometimes the options market can signal when it’s time to adjust a trade. But how long should options traders stick with an adjustment plan?

3 min read  |  Options Trading Basics
Long Stock versus Long Call: Exploring Your Options May 11, 2016 12:00 AM   |  

Can you use call options as a substitute for long stock? Learn the benefits and risks of this strategy.

2 min read  |  Options Trading Basics
The Trader's Cure For the Volatility Blues April 12, 2016 4:00 AM   |  

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.

10 min read  |  Advanced Options Strategies
Beyond the Basics: Calendar Spreads 3.0 April 12, 2016 4:00 AM   |  

What’s a handy core options strategy that leverages time? The calendar spread. But there’s more to them than just buying and waiting.

6 min read  |  Advanced Options Strategies
Know Your Risk Profile: Selecting and Culling Option Strikes April 7, 2016 12:01 AM   |  

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.

4 min read  |  Options Trading Basics
Tricks of Traders Fund Managers Only Dream Of December 31, 2015 11:00 PM   |  

A trader's job can be easier than an average mutual fund manager's—A few reasons the playing field for traders is more than leveled.

6 min read  |  Options Trading Basics
Options Tricks: Resuscitating Your Dead Mutual Funds December 31, 2015 11:00 PM   |  

There’s a way to generate “income” from dead investments, even if they aren’t optionable—how to hedge mutual funds with options.

8 min read  |  Advanced Options Strategies
Long Tooth, Busted Jaw: Three Signs a Trend May End December 31, 2015 11:00 PM   |  

When will a stock trend end? There are a few stock chart indicators that make spotting trend reversal warning signs a little easier.

6 min read  |  Charting
Rethink Options: Aim for Income by Embracing Market Inaction November 23, 2015 7:00 PM   |  

Income-focused option trades succeed when the market doesn’t move that much. Learn how to recognize income opportunity.

4 min read  |  Options Trading Basics
The Art of Exiting a Trade: How to Hold 'Em, How to Fold 'Em October 1, 2015 6:37 PM   |  

Three of the most popular options strategies on how to exit a winning or losing trade: long options, vertical spreads, and calendar spreads.

7 min read  |  Advanced Options Strategies
How to Use Chart Divergences as Leading Indicators September 7, 2015 8:00 PM   |  

Learn to recognize divergences between chart indicators and price action. It’s the first step toward confirming trends.

5 min read  |  Charting
Advanced Trading: Choosing Your Iron Condor Strike Price July 22, 2015 8:00 PM   |  

Consider option delta as one way to narrow the mathematical range when choosing an iron condor strike price.

3 min read  |  Advanced Options Strategies
Short-Sighted on Purpose: Options to Hedge Jobs Report July 1, 2015 8:00 PM   |  

Looking for a hedge? Consider short-term long put options or volatility trades aimed at protecting stocks from unexpected economic results.

3 min read  |  Advanced Options Strategies
Big Margin For The Masses: The Nuts And Bolts of Portfolio Margin July 1, 2015 6:03 PM   |  

Margin trading has been around forever. But qualified traders, there’s another category—portfolio margin—that could take your leverage to new heights.

8 min read  |  Margin
Keep Your Pants On: From a Naked Put Sale to a Call Purchase June 3, 2015 8:00 PM   |  

Look beyond options premium collection to additional stock hedging. Consider turning the cash from a naked put sale into an out-of-the-money call purchase.

4 min read  |  Advanced Options Strategies
How to Sniff Out the Options Opportunity Under Your Nose May 27, 2015 8:00 PM   |  

Monitor strong spurts of volume and inflated premiums for potential option trading opportunities. TD Ameritrade tools can help.

4 min read  |  Options Trading Basics
Far Out: Low Volatility Can Put Options Opps on the Horizon May 13, 2015 8:01 PM   |  

Explore extreme stock volatility lows for potential opportunities to buy put options for short-term protection or speculative bearish trades to hedge a bullis

3 min read  |  Options Trading Basics
Swim in the Deep End with Out-of-the-Money Options May 13, 2015 8:00 PM   |  

Looking to supplement returns? Consider selling out-of-the-money options. Unless there are large price swings, these options don’t change much.

2 min read  |  Options Trading Basics
Reading the Alt Crowd: Gauging Stock Momentum with Options April 27, 2015 11:11 PM   |  

To gauge a stock trend, it's all in the charts. But what about its options? You may not be trading options, but ignore them, and you may be missing the bigger picture.

8 min read  |  thinkorswim Platform
Trading is (Not) Gambling: Why the Naysayers are Wrong April 27, 2015 10:05 PM   |  

The principles of successful trading are also rooted in the professional side of the card table rather than pure luck. The trick isn’t just knowing when to hold 'em, or fold 'em, but why.

8 min read  |  Options Trading Basics
Can't Commit to Selling? Think Short Vertical Option Spread April 15, 2015 8:01 PM   |  

Shorting a stock you no longer like isn't an easy decision. In fact, it can be an expensive decision. Instead, you might turn to the options market and take a closer look at short vertical spreads.

8 min read  |  Advanced Options Strategies
Out-of-the-Money or In-the-Money Spreads? How to Choose March 26, 2015 5:00 AM   |  

Liquidity, cost, and overall tradability turn options strategies that are similar on paper into real-life scenarios that look quite different.

2 min read  |  Advanced Options Strategies
Extreme Skew: What Options Traders Need to Know February 5, 2015 4:00 AM   |  

Investors seeking protection from market volatility have contributed to extreme “SKEW” levels in options markets.

2 min read  |  Options Trading Basics
Trading Momentum Without a Chart April 1, 2014 5:07 PM   |  

Picking months and strikes are big decisions for options traders. Do probabilities matter? We think so.

8 min read  |  thinkorswim Platform
ETFs With Their Pants Down: Leveraged and Inverse Foibles April 1, 2014 4:19 PM   |  

When ETFs lose more than the market they're tracking, you might be holding an inverse or leveraged ETF. If you don't know what you're doing, think jeans around the ankles.

7 min read  |  ETFs & Mutual Funds
VIX Futures: The Unfair Advantage January 1, 2014 4:43 PM   |  

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...

7 min read  |  Futures
Strategy Focus: The Truth About Covered Calls January 1, 2014 4:37 PM   |  

Just when you though you've heard it all about covered calls, along comes a new reason for traders to rethink this old dog.

7 min read  |  Options Trading Basics
Spread Trading Part 4: Connecting the Dots October 1, 2013 5:26 PM   |  

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.

11 min read  |  Advanced Options Strategies
Viewing Option Volatility through a Few Different Lenses October 1, 2013 4:54 PM   |  

Volatility has become easy shorthand for trading talk. But just below the surface, volatility can be confusing. Yet, when you look at it through different lenses, a few basic truths start to clear things up.

7 min read  |  Advanced Options Strategies
Trading Earnings Announcements without Getting Skewed July 1, 2013 5:19 PM   |  

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.

10 min read  |  Advanced Options Strategies
Did You Really Go There? High-Probability Options Trading June 5, 2013 3:33 PM   |  

Anything can happen in one trade. But over a large number of options trades, high probabilities are what matter most.

4 min read  |  Advanced Options Strategies
Killing Time: A Calendar Spread Trading Primer March 1, 2013 4:09 PM   |  

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.

13 min read  |  Advanced Options Strategies
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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.

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