Options Trading

Rolling Options Forward

Rolling Options The act of closing an open option position while simultaneously opening a new, mostly similar, option position via a spread. Reasons for Rolling Options There are two main reasons you might want to … read more Rolling Options Forward

Covered Calls

Definition of Covered Calls This is an options trading technique in which you own underlying stock, then sell (write) call options at a higher strike price at an equivalent amount to your stock position. Because … read more Covered Calls

The Bid/Ask Spread

Going to the Market Definition The bid/ask spread is the difference in price between the price a buyer is willing to pay (the bid), and the price a seller is welling to sell (the ask). … read more The Bid/Ask Spread

Options Basics—Managing Profits on Options

Managing Options Profits A common problem new options traders have—and a great problem to have—is how best to take profits. Option’s leverage can mean that a relatively small stock price move can mean significant percentage gains … read more Options Basics—Managing Profits on Options

Options Stop Orders

Creating Stop Orders for Options Trades At Wanderer we preach the need for using stops on trades. Without knowing your risk you can’t accurately calculate your reward-to-risk, and without that it’s impossible to determine if … read more Options Stop Orders

Options Basics—Selling Naked Puts

Selling naked puts (being short puts all by themselves) is a risky trade reserved for experienced traders. While it can leave you open to significant downside risk, it can also be used as an effective … read more Options Basics—Selling Naked Puts

Options Basics—Strangles

A strangle option strategy involves buying (or selling) an out-of-the-money call, and buying (or selling) an out-of-the-money put with the same expiration. A strangle buyer expects the price of the stock to move significantly outside … read more Options Basics—Strangles

Options Basics—Iron Condor

An iron condor is a trading strategy that uses both a put spread and a call spread. It is similar to a strangle except that it limits profit/loss potential to the difference between the strike … read more Options Basics—Iron Condor

Options Basics—Legging Into a Call Spread

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

Options Basics—Call Spreads

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