Back To Basics Friday: Choose The Best Option Every Time

When studying option trading basics, a critical formula is: Option premium = intrinsic value + time value (or extrinsic value) Many new traders find the difference between intrinsic and extrinsic value confusion, so I felt an article would be appropriate. There are three types of strike prices as they relate to…

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Will Vertical Spreads Offer Better Risk-Reward Than Single Options?

Many investors and traders venturing into the world of options begin by learning about single-legged options strategies. I will always preach education to my readers. If you can add in persistence and some hands-on learning, you could start considering that buying and selling single options is your ‘bread-and-butter’ trading strategy….

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Back To Basics Friday: Two Strategies For IRA Accounts

The reason options were invented was to reduce risk. Options transfer risk from the risk averse to the risk taker. When you accept that specified risk, the risk taker (seller) is paid a cash premium by the risk avoider. If you have been reading my daily newsletter, by now you…

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Why The Greeks Are Important

The objective of every trader is to make money, but with an acceptable amount of risk. We find that one of the major issues for new options traders is because they have no idea how to use options to achieve their financial goals. Buy low and sell high is certainly…

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How To Survive a Market Correction

The last few market sessions have been scary, but they are very normal. Most experts predict we could see a correction every 8-12 months, and last on average about 54 days. What’s most strange is that corrections are a sign of a healthy stock market… in most cases. A correction…

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Back to Basics Friday: The Biggest Options Myth Dispelled

One promoter who likes the idea of writing covered calls states that: “Over 75% of all options held until expiration expire worthless… That’s why you should do what the pros do and sell options to other people. After all, if most of them will expire worthless, why not collect some money for…

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A Simple Way To Boost Your Profits… Even If You Are Buy and Holder

Are you a buy-and-hold investor? I want you to pay very close attention to what we are saying. Most buy-and-hold investors will watch their gains disappear as volatility eats away at them. There is an incredibly simple strategy you can use to boost your ROI and hold those shares over…

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An Illustrative Guide To Trading Options

The best way for most people to understand a complex topic is through illustration. I don’t have any scientific evidence to back this up, so I thought I would toss out that nonsense on a lazy Friday. Either way, I found this great infographic made by our friends at Steady Options….

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Back to Basics Friday: Selling Calls

Let’s say the market turns bearish.  I realize this is hard to believe, but at some point, it will happen. You are going to need a bearish to neutral strategy that will capitalize on time decay, downward moves in vol and certain a down move in the underlying stock. So…

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Back To Basics Friday: Picking an Options Broker

If you ask any diehard options trader what the best broker is for options trading, you’ll likely get a variety of answers. This is because many traders rate brokers based on different factors. Having said that, one of the most important factors when selecting an options trading broker is cost. When…

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Here’s Why It Could Be Another Big Year For Income Traders

For most market spectators, the beginning of the year is when we are read analysts forecasts for the year ahead. Most, if not all, these forward-looking forecasts are based on historical data. One solid way to project a future price target for the S&P 500 uses the long-term average price-to-earnings…

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How To Use Orders To Target Profits

In the world of investing generally – and options trading in particular – it is not only important to know when to get in and get out of a trade, it is also important to know how to do so. Whether you still call trades into your broker, or enter them into an online platform, or…

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