Once you have done your preliminary analysis of a stock and come to some conclusion (bullish, bearish or neutral), your job as an options trader is only partly done. Your next step is how to maximize the power of options by constructing an options play Click the video below to see how we are planning […]
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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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Think of a carpenter. He or she is not going to be able to produce a fine piece of furniture if they only have a sledgehammer in their toolbox. The same can be said for a trader. He or she is only as good as their trading tools. Click the video below as I run […]
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An option’s gamma is a measure of the rate of change of its delta. The gamma of an option reflects the change in the delta in response to a one-point movement of the underlying stock price. Like the delta, the gamma is not a static measure. It is constantly changing, even with tiny movements of the […]
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Although not strategies that we employ in the Short-Term Options Room, straddles and strangles can be very viable options strategies if used in the right circumstances. Click the video below to hear about the similarities and differences between the two strategies and when the best time to use them is. Follow me on Twitter @MikeShorrCbot […]
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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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Today we are looking at Zscaler, Inc. (Ticker: ZS). It’s relatively new to the market but has a ton of upside potential in the tech-space. Click the video below to see how I break this down for the class. Follow me at on Twitter @CboeSib
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A ratio spread. There are many names for it, some call it a “one-by-two”, some call it a “back spread”, but it simply involves buying (or selling) a vertical spread and selling (or buying) an extra out-of-the-money leg. We do not do these types of spreads in the room typically due to the constrictions of most […]
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Cash dividends affect option prices through their effect on the underlying stock price. Because the stock price is expected to drop by the amount of the dividend on the ex-dividend date, high cash dividends imply lower call premiums and higher put premiums. Click the video below to see how I break this down for the class. Follow me at on Twitter @CboeSib
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Gamma is the first derivative of delta and is used when trying to gauge the price movement of an option, relative to the amount it is in or out of the money. If you think about delta as the speed of an option, think about gamma as the acceleration. In that same regard, gamma is the […]
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