Implied Volatility (IV) and Vega are very much related but are by no means the same thing. Implied volatility has no direct correlation to actual past historical or statistical volatility; rather it is a measure of predicted future movement. Implied volatility tends to increase when there is uncertainty or anticipated news, while it tends to […]
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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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Mathematically speaking, Cost of carry (COC) is the annualized interest percentage cost for a futures contract versus a similar position in cash market and carried to maturity of the futures contract, less any dividend expected till the expiry of the contract. Imagine you had to buy a commodity and store this for future delivery for […]
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Dealing with a losing trade. It’s not fun and certainly, no one looks forward to dealing with them. It’s a fact of life for a trader and you must learn to deal with them or you will never be ultimately successful. But, you also need to be informed (and thus empowered) to deal with the risks […]
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When I talk to new (and even some veteran) traders when they are struggling with their trading, invariably one of the issues that they have is allocation. Options traders should not characterize themselves as a “5 lot trader” or a “10 lot trader” as a futures trader may. Futures traders typically manage their risk by […]
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Volatility skew refers to the fact that options on the same underlying asset, like a stock or a future, with different strike prices, but which expire at the same time, have different implied volatilities. Implied volatility can be explained as the uncertainty related to an option’s underlying stock, and the changes triggered in different options’ trading prices. Puts […]
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I am typically not a big fan of “rolling a position”. Typically you get one of two things or both. Either you increase your potential risk or you are just putting off the inevitable. In all cases, you are going to generate more fees. But there are times when it makes sense. When you hold […]
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So you have pulled the trigger and entered into an options spread. Congratualations! Now what? Managing the signal is just as important as your decision to enter one. Click the video below to find out how you can use delta to target your entry and exit levels. Follow me on Twitter @MikeShorrCbot
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Stop, Stop Limit, Trailing Stop and OCO orders can be used across just about any asset class. They are similar in nature but with some very important nuances. Click the video below as we discuss these types of orders. Grab a free day pass to one of our live signal trading rooms today>>http://bit.ly/nl-freepass Follow me […]
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The VIX and VXX are both very popular trading vehicles for trading volatility. But, unlike the perceptions of many traders, they are not exactly interchangeable. There are many similarities and more importantly, some very important differences. First, the similarities: Both are based on S&P 500 volatility futures Both will show a strong reversion to a […]
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