What is Mean Reversion

A common way to describe a mean reversion trade is a rubber band that stretches away and then snaps back.  The phrase reversion to the mean refers to a statistical concept that high and low prices are temporary and a price will tend to go back to its average over time. What is mean reversion and how can you benefit […]

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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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How to predict the Stock Market

Stock market prediction is the act of trying to determine the future value of a company stock or other financial instrument traded on an exchange. The successful prediction of a stock’s future price could yield significant profit. The efficient-market hypothesis suggests that stock prices reflect all currently available information and any price changes that are not based on newly revealed […]

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Which Options to Trade

How do you determine the best options to trade? Is it as simple as to select the right kind of stock? No, options are more complex then stocks and offer therefore much more opportunities for the investor or trader. Even though an option contract’s value is based on the underlying stock price. A stock picker is not necessarily going to […]

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Implied volatility as a trading tool

Implied volatility as a trading tool

Implied Volatility is important when you are selling options. It is a great trading tool that shows you how much potential the stock can move according the market’s opinion. It doesn’t give a clue which direction it is going to move though. If implied volatility is high, the market expects that the stock can move largely. When the stock has […]

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