Dec 5, 2015 | Investment Basics, Option Trading Basics, Options Calculations, Put-selling, Stock Option Strategies
One of the practical applications of selling cash-secured puts is to buy shares “at a discount” In my books and DVDs I use out-of-the-money puts in lieu of setting limit orders in order to accomplish this goal. Some of our members have inquired about using...
Nov 28, 2015 | Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Option trading basics teaches us that the concept of put-call parity means that for every call option price, the corresponding put option (same stock, strike and expiration) will have an implied value. For example, if Company BCI is trading at $50.00 per share, if the...
Nov 21, 2015 | Covered Call Exit Strategies, Exit Strategies, Option Trading Basics, Options Calculations, Stock Option Strategies
Exit strategies for both covered call writing and selling cash-secured puts is one of the three required skills for maximizing investment returns. Whether we are mitigating losses, turning losses into gains or enhancing winning positions to even higher levels, we must...
Nov 14, 2015 | Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
LEAPS are long-term options that have expiration dates between nine months and two and a half years out. The term is an acronym for Long Term Equity AnticiPation Securities. Once the expiration date is less than nine months away, LEAPS convert to conventional options....
Nov 7, 2015 | Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
When we write covered calls or cash-secured puts, we are selling volatility. The time value component of a short-term option premium reflects the amount of time until expiration plus the volatility of the underlying security. Since most of us are comparing options...
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