Nov 17, 2012 | Option Trading Basics, Options Trade Execution
There are two ways to enter a covered call position. The first is called legging-in where the stock is purchased and then the option is sold. Two distinct trades are executed. The second is known as a buy-write order where the security purchase and option sale is...
Nov 10, 2012 | Option Trading Basics, Stock Option Strategies
An integral part of understanding option trading basics, is mastering the components that influence option value. Many option traders will look to make money as a result of a discrepancy between an option’s current market value and its theoretical value. In other...
Nov 3, 2012 | Option Trading Basics, Stock Option Strategies
JUST BECAUSE YOU BUY ITS PRODUCTS DOESN’T MEAN YOU SHOULD BUY ITS STOCK The KORS initial public offering was the topic du jour among my girlfriends at a holiday party last December. The ladies I know who invest in stocks were trying to figure out how to get in on the...
Oct 27, 2012 | Option Trading Basics, Stock Option Strategies
As safe a strategy as covered call writing is there is some risk; the risk is in purchasing the stock, not in selling the option. For this reason, some investors who sell covered calls also buy protective puts to alleviate some of the risk especially in volatile...
Oct 20, 2012 | Option Trading Basics, Options Calculations
In covered call writing, our option premiums are influenced by the volatility of the underlying security. Using the Black Scholes option pricing model, we can calculate the volatility of the underlying by entering the market prices for the options. Common sense would...
Oct 6, 2012 | Option Trading Basics, Stock Option Strategies
Sophia Loren once said, “It’s better to explore life and make mistakes than to play it safe. Mistakes are part of the dues one pays for a full life.” I presume she was speaking about love and romance rather than options trading, but her advice is sage in both...
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