How is an option’s value derived? Ultimately, it’s up to the laws of supply and demand but in the time before expiration, it’s up to the options traders to determine value. Click the video below to see how we accomplish this task. Follow me at on Twitter @CboeSib
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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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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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There are a number of different types of options expiration types. In the vast majority of our signals, our options will be categorized as “American”-style options. There are some, like VIX options, that are “European”-style options. Here’s a quick explanation of both. The term “American style” in relation to options has nothing to do with […]
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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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We had a different technical pattern show up today in Shopify (Ticker: SHOP). This pattern is called a swing breakout. Click the video below as I explain the technical set up and how we employed a broken wing call butterfly to take advantage of this bullish trigger. Follow me on Twitter @MikeShorrCbot
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The Inside Bar entry is a technical trigger based on a pattern of consolidation followed by a move out of the range. This was, in fact, the case with EBAY today. Click the video below as I explain the technical set up and how we employed a debit call vertical to take advantage of this trigger. […]
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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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One of the most rewarding parts of being an instructor here at Prosper Trading Academy is when one of our students takes what he or she has learned and has applied it to their own trading. Click the video below as we discuss one of these instances from a student who is considering a play […]
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Put-call parity is a principle that defines the relationship between the price of European put options and European call options of the same class, that is, with the same underlying asset, strike price, and expiration date. Put-call parity states that simultaneously holding a short put and long call of the same class will deliver the same […]
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