There are different ways to determine the size of your options trade. You may want to risk a certain percentage per trade or you may consider total portfolio risk. When you are ready to increase your risk tolerance, you could increase the number of trades, the amount you put into each trade, or the risk level for each trade.
Pairs trading is a trading strategy that involves two stocks in the same sector. There are different ways to create a pairs trade, whether you are pairing two stocks, stocks and ETFs, stocks and options, or options and options.
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.
Explore options statistics on thinkorswim—implied & historical vol and percentiles, the Sizzle Index, and the put/call ratio. Learn how options stats can help traders and investors make more informed decisions.
When volatility falls, many option traders turn to these five strategies designed to capitalize on depressed volatility levels.
Once you’ve learned to use the Risk Profile tool on the thinkorswim® platform for single-leg options, you may wish to use it for more complex trades.
Vertical spreads are fairly versatile when making a directional stance. But what if you're stuck in a range-bound market? Consider the iron condor.
Treasury bonds are boring, right? Wrong. For traders, they represent a market that can be bigger than stocks.
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.
Selling vertical credit spreads, and how it may be a high-probability strategy.
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.
Three options strategies on how to exit a winning or losing trade: long options, vertical spreads, and calendar spreads.
Learn how vertical spreads can be a more cost-effective way to speculate on direction, versus buying single legged options like a long call or long put.
There is a way to turn naked options into risk-defined positions to lower the margin requirements and free up capital at the same time. The strategy: a vertical spread.
Learn to calculate profit and loss and assess risk parameters on vertical option spreads.
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.
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.
There is a way to turn naked options into risk-defined positions and free up capital at the same time. The strategy: a Vertical spread.
Ready for a more advanced options trading strategy? We explain vertical spreads (credit and debit).
When will a stock trend end? There are a few stock chart indicators that make spotting trend reversal warning signs a little easier.
Income-focused option trades succeed when the market doesn’t move that much. Learn how to recognize income opportunity.
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.
Use volatility to pick an options strategy to speculate on a given direction, rather than to replace fundamental analysis and charts to determine potential.
Choose adjustments for losing trades that are true to your market outlook, risk tolerance, and trading style.
Learn to recognize divergences between chart indicators and price action. It’s the first step toward confirming trends.
Align your option vertical spread with the level and direction of implied volatility to position your trade for success.
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.
For options speculators with less of an appetite for risk, these vertical spreads offer up a savory solution.
Anything can happen in one trade. But over a large number of options trades, high probabilities are what matter most.
Our chief market strategist breaks down the day's top business stories and offers insight on how they might impact your trading and investing.
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.
Yes, you can have a derivative on a derivative. But don’t let that scare you. Options on futures may be easier to understand than you think.
Because an options spread has more than one "leg," does it make sense to enter one leg at a time if you can get a better price on a different exchange? Maybe.
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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.
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.
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