February 7, 2019

It’s Allocation! Allocation! Allocation!

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 ticks.  For example, they try to take 4 ticks out of their winners to risk 2 ticks on their losers.  That’s because the tick size is static.  That is not the case in options.  That is why you have to manage your CAPITAL AT RISK.  Click the video below as I discuss this in more detail.

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about the author:

Mike Shorr

Since 1994, Michael has been an on-the-floor market maker, Vice-President of Interest Rate Derivatives for Knight Financial Products and Director of Education and Options Instructor at Trading Advantage. He makes the oftentimes complex world of options and trading accessible to the novice and advanced trader alike. Michael has a Bachelor of Science degree in Statistics and Finance from the University of Illinois Champaign-Urbana. He presently is Director, Trader Education at ProsperTradingAcademy.

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March 28, 2024

Wait! There Is An Options Greek Called Rho?

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Options traders employ numerous strategies to achieve their goals in the market, and the broken-wing butterfly is a particularly useful technique to have at your disposal. This guide will explain the strategy in detail and show you how it can potentially be leveraged in various situations to take advantage of the market environment. Want My […]

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May 8, 2024

What Is Delta In Options Trading?

Understanding the Delta of an option is crucial for both new and seasoned traders. It’s one of five specific calculations called “Greeks,” which help measure specific factors that could influence the price of an options contract. Delta is a metric that helps you gauge how much the value of an option contract is expected to […]

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March 28, 2024

Wait! There Is An Options Greek Called Rho?

Out of all the Greeks in options trading, Rho is capable of providing uniquely critical insights that others cannot offer. Rho measures an option contract’s susceptibility to changing interest rates. We’ll explain how Rho by defining its specific functions, how interest rates impact options trading, and cover some pertinent scenarios. What is Rho in Options […]

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