How to Trade Volatility effectively

For traders it is important to know how to trade Volatility. When the stock moves up and down Volatility increases. While uncertainty increases the option premium increases. This change of the stock option premium always is exaggerated. And the experienced trader knows that the the price will have a mean reversion. Mean reversion is the tendency of a stock price to […]

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Make money on Options Expiration

  Investors who sell options receive option premium in the hope that it expire worthless at options expiration so that they can keep the premium. All options have a limited useful lifespan and every option contract is defined by an expiration month. The option expiration date is the date on which an options contract becomes invalid and the right to […]

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Tips for beginning option traders

Option trading may be daunting for beginning traders, but with the right foundation and a gradual investment of funds, you can expect to see significant returns. Here are a few tips to help you make smart investment decisions. Do not invest money you cannot afford to lose. Make intelligent decisions about what you can afford to invest. Selling Options is […]

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Know when to take Profits

  When you start with trading, you often will hear a number of pearls of wisdom. Keep your losses small, let your winners run, no one ever went broke taking profits. You can keep your losses small at order entry. It is possible to select defined risk trades and you do not trading too many contracts. It is not a […]

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Correct Trading Attitude

Trading is one of the most exhilarating activities one can get involve with. Every day or each moment price movement can dramatically increase you well being. It can increase of diminish your capital of the active trader. The winnings can be swift and enormous, while the losses can take you out of the game. The potential to acquire fast and […]

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How to Trade with an Edge?

What Exactly is a Profitable Edge? Traders are constantly looking for a trading system that hits 100% winners or a system that never makes a losing trade. This for many reasons is impossible and further below in this article it is explained in more detail why achieving an 100% win rate is simply impossible. So firstly what is an edge? […]

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Post Modern Portfolio Theory

What is Modern Portfolio Theory Modern portfolio theory (MPT) is a theory on how risk-averse investors can construct portfolios to optimize or maximize expected return. It is based on a given level of market risk. Emphasizing that risk is an inherent part of higher reward. Also called “portfolio theory” or “portfolio management theory.” A risk averse investor is an investor […]

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Sell Options with high Implied Volatility

For People who are Selling Option Premium, High Implied Volatility is very important. Options are more expensive than normal and they return to then mean easily. Traders can make money when the stock movers but as well when it moves up and down and returns to its original price. Stock Markets, Stock Option, Futures and commodities are moving all the […]

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Advantages by Trading Implied Volatility

Trading Implied Volatility is selling the premium of the volatility expectation that is priced into individual options. The implied volatility of an option is actually backed out of the price of the option. All the inputs of an options pricing model are known (time to expiration, strike, price, interest rates) except for the volatility that the option is pricing in. […]

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Trading Implied Volatility

Trading Implied Volatility is a key concept for option traders. Even if you are a beginner, you should try to have at least a basic understanding. Options with a high Implied Volatility are more expensive than options with low IV. This knowledge gives us an advantage when we sell options and receive option premium. Option volatility is reflected by the […]

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Implied Volatility Rank

Before we explain Implied Volatility Rank (IVR) we briefly look at Implied Volatility. Implied volatility (IV) is a forward-looking expectation of price fluctuation.  This is derived from an option pricing model and carries great importance in the pricing of options.  However, due to multiple inputs in option pricing models, IV can (and typically does) constantly fluctuate. Beyond the actual reading […]

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Implied Volatility Explanation

  Volatility can be defined by how much the price of an underlying can fluctuate during a certain period of time. The volatility of the underlying instrument plays a big role in the pricing of the options. In the option market, traders care about historical volatility and implied volatility. We focus on Implied Volatility. We sell options with high Implied […]

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