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→
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→
Options for Beginners Options are derivative contracts that allow buyers of the contracts to buy (using calls) or sell (using puts) a security at a chosen price (strike price) on or before a specific date … read more Options Basics 1—Calls and Puts→
An option is a legally binding agreement between a buyer and a seller. The buyer of a call option has the right, but not the obligation, to buy 100 shares of stock by a specific … read more Options Basics—What is an Option→
If you’re new to options trading, the terminology can get a bit confusing. Here are the most common basic options trading terms you’ll run into. We’re putting this up as a sort of options cheat … read more Options Terminology→