Nov 22, 2014 | Covered Call Exit Strategies, Exit Strategies, Option Trading Basics, Options Calculations, Stock Option Strategies
When protective puts are integrated into our covered call writing strategy it is known as the collar strategy. The covered call aspect of the trade generates cash flow and the protective put leg serves as an insurance policy against catastrophic share...
Nov 15, 2014 | Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Interest rates and the option Greeks play an important role in understanding option trading basics. Rho, not considered a major Greek, measures the change in an option’s price resulting from a 1% change in interest rates. When interest rates do change, it is...
Oct 4, 2014 | Option Trading Basics, Options Calculations, Stock Option Strategies
Strike price selection is such a key part of options trading basics and options calculations. There are 3 types of strike prices for both put and call options: in-the-money, at-the-money (and the closely related near-the-money) and out-of-the-money. Moneyness tells...
Sep 6, 2014 | Option Trading Basics, Options Calculations, Stock Option Strategies
Mastering the concepts of the time value of our option premiums and how theta impacts our option profits will help elevate our returns to the highest possible levels. Let’s first define these terms: Definitions Time value: The portion of the option premium that...
Aug 23, 2014 | Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
With the rising popularity of stock option strategies and covered call writing in particular, we have seen the creation of more option products like weekly stock options. Weeklys expire each Friday of the month whereas the more traditional monthlys generally expire...
Aug 16, 2014 | Covered Call Exit Strategies, Exit Strategies, Option Trading Basics, Options Calculations, Stock Option Strategies
Covered call writing positions can be altered by exit strategies or contract adjustments. Contract adjustments are alterations that are typically made to option contracts when the underlying stock undergoes a stock split, pays a special cash and/or stock dividend or...
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