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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Option margin is the cash or securities an investor must deposit in his account as collateral before writing – or selling – options. Margin requirements are established by the Federal Reserve Board in Regulation T. Option margin differs from other types of margin that you may associate with stock or futures trading. These types of margin allow a trader to employ leverage in […]
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One of the most powerful aspects of trading options is the leverage that they afford us. In order to take advantage and maximize this leverage, we have to accurately target the correct price level. How do we do that? We use implied volatility and statistical calculations to target the probable move. Remember, we trade in […]
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On-Balance Volume keeps a running total of volume flowing into or out of a security. When the security closes higher than the previous close, all of the day’s volume is considered up-volume. A close lower than the previous day’s results in all of the day’s volume considered down-volume. A rising OBV is defined as a […]
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The CME FedWatch Tool analyzes the probability of FOMC rate moves for upcoming meetings. Using 30-Day Fed Fund futures pricing data, which have long been relied upon to express the market’s views on the likelihood of changes in U.S. monetary policy, the tool visualizes both current and historical probabilities of various FOMC rate change outcomes […]
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If you have spent any time in Scott’s room, you are very familiar with strategies such as butterflies and even “broken-wing” butterflies. But did you know there are also strategies that we categorize as “Ratioed Butterflies”? Click the video below to see our approach using this methodology. Grab a free day pass to one of […]
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Did you know that you can import live ThinkOrSwim data directly into an excel spreadsheet? You can! Click the video below as I explain how to use this functionality with a specific example using our Inside Bar spreadsheet Grab a free day pass to one of our live signal trading rooms today>>http://bit.ly/nl-freepass Follow me on […]
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You may have heard of the terms simple and compound accruals. What does it mean and how is it important to one’s trading account? Click the video below as I explain both of these concepts and how to apply them to your trading and risk methodologies. Follow me on Twitter @MikeShorrCBOT
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