If you are actively trading in the stock market in 2023, chances are you’ve heard a new buzzword flying around: Prop Trading, short for Proprietary Trading. Whether you’ve tried prop trading or not – or have even heard of it at all – its popularity is quickly growing because it provides everyday traders with a […]
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Defining Volatility Volatility signifies a security or index price’s degree of variation over time, and is typically associated with price swings in either direction. Volatility often indicates how much risk or uncertainty is tied to the size of changes in an asset’s value. Higher volatility means more risk (the asset’s price can change drastically over […]
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An inside bar is just what the name implied. It is a bar that is “inside” of another bar. We use a daily chart for this approach. So the high from two days ago is higher than the high from one day ago and the low of two days ago is lower than the low […]
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A ratio spread is a neutral options strategy in which an investor simultaneously holds an unequal number of long and short or written options. … Conceptually, this is similar to a spread strategy in that there are short and long positions of the same options type (put or call) on the same underlying asset. A backspread is s a type of option trading plan in which […]
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We believe that some banks are in a position to make the next leg up? Why? You ask. Unlike your conventional banks, some banks like Goldman Sachs, JP Morgan, Citibank and, Morgan Stanley have resources that many conventional banks do not. They have MASSIVE trading entities. They are not simply a place to park […]
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Vega is the measurement of an option’s price sensitivity to changes in the volatility of the underlying asset. Vega represents the amount that an option contract’s price changes in reaction to a 1% change in the implied volatility of the underlying asset. We also discuss order flow and how it can affect implied volatility and the balance of supply and demand. Click […]
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Open interest is a concept that is unique to options. Volume is a parallel concept to stocks. First, what are they? Second, why should an options trader care about them? Open interest is the number of active contracts. It is a metric that can be tracked or displayed on most options trading platforms, like bid […]
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A call is an option that gives the buyer the right, not the obligation, to buy an underlying asset at a certain point in time at a certain price. A put option gives the buyer the right, not the obligation, to sell an underlying asset at a certain point in time at a certain price. […]
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Gamma is the rate of change for an option’s delta based on a single-point move in the delta’s price. Gamma is at its highest when an option is at the money and is at its lowest when it is further away from the money. Click the video below to get more detail. Grab a free day pass to one of our live […]
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“Gamma Scalping” is a concept that retail options traders should know about, but frankly will rarely, if ever, use. Not because it is a bad idea, but because it is capital intensive and it’s necessary to own the underlying asset. “Gamma Scalping” involves the process of scalping in and out of a stock or futures […]
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