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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We have had a position on in the Nasdaq ETF, QQQ, for some time now. We have made a couple of adjustments along the way. Click the video below to see how this great signal has run its course. Follow me at on Twitter @CboeSib
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Created by the Chicago Board Options Exchange (CBOE), the Volatility Index, or VIX, is a real-time market index that represents the market’s expectation of 30-day forward-looking volatility. Derived from the price inputs of the S&P 500 index options, it provides a measure of market risk and investors’ sentiments. If you want to trade OPTIONS on the […]
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Remember, we trade in the world of probabilities not possibilities. It is important to be reasonable with your expectations when talking about a directional play in stocks using options. What is reasonable. How is one to know? Click the video below to learn more about how to calculate the expected move in a stock. Follow […]
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In simple terms, IV is determined by the current price of option contracts on a particular stock or future. It is represented as a percentage that indicates the annualized expected one standard deviation range for the stock based on the option prices. For example, an IV of 25% on a $200 stock would represent a […]
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Delta measures the degree to which an option is exposed to shifts in the price of the underlying asset (i.e. stock) or commodity (i.e. futures contract). Values range from 1.0 to –1.0 (or 100 to –100, depending on the convention employed). Follow me on Twitter @MikeShorrCbot
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Remember, we trade in the world of PROBABILITIES and not POSSIBILITIES. This concept must be kept in mind. Click the video below when we outline these principals with our entry in Electronic Arts (Ticker: EA):
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The ThinkOrSwim Risk Profile interface enables you to estimate risk probability based on risk curves. These curves can be plotted for specific potential (simulated) trades or just for a specified underlying. The tutorial below will explain how to view, set up, and interpret the risk profile. Follow me on Twitter @Cboesib
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Many options traders focus purely on the directional aspect of a trade. What often gets left behind is not only are you right directionally but have you, in fact, turned a profit? Click the video below to fully understand this facet of risk management.
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It’s quite easy to manage a winning trade. Everyone is a genius when profits are on the board. But, part of trading is dealing with how to manage trades that are not in your favor. This video will explain how to set profit targets as well as stop levels. Follow me on Twitter @MikeShorrCbot
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