Traders, hopefully, will often find themselves in the position of making money on their trades. A very natural inclination, unfortunately, is to book profits too early. This is particularly true of new traders or traders … read more Options Basics—Legging Into a Call Spread→
Call spreads involve both buying and selling a call. They can be used to reduce initial premium outlay, and reduce risk (but also limit profit potential). They can also help offset the effects of vega … read more Options Basics—Call Spreads→
In this video we’ll walk through an example of buying EXPE call options.
Let’s do a walk-through of buying calls in AAPL, from looking at the chart and determining an entry, to deciding where our stop would be and what our upside target is. With those numbers in … read more Options Basics—Call Buying Example AAPL→
To use a live version of the calculator, click here to visit the Wanderer Options Calculator Page. The Option Calculator can be used to easily calculate the quantity of at-the-money options you should trade in … read more Options Basics 4—How to Use the Options Calculator→
How do we calculate the risk of an option.
How to choose what expiration and strike price to trade can seem daunting when you first look at an option chain. However, 90% of trades will probably do well to just stick with one general … read more Options Basics—Choosing a Strike Price→
There are a few basics to understand about reading an option chain.
Implied volatility is one of the key determining factors in an option’s value. Higher volatility equals higher price. During a normal, slowly grinding market, implied volatility is of less concern when trading options, because it … read more Options Basics—Implied Volatility→
Delta is the ratio that compares the change in price of an option to a corresponding change in the stock. It’s easier to understand this way. Look at the image below of DAL stock. The … read more Options Basics—What is Delta→