WATCH THE MARKET

It is a common observation that traders allow their options to expire. This is true for traders who trade long positions. The market needs to reach a price to make the option profitable. If a trader wants to consider an option, he/she must look into the probability that the market Read more…

THE AVERAGE MONTHLY RANGE

A lot of options traders prefer looking at the option premium rather than the possible returns. Although it is important, they tend to focus too much on it, thereby missing the possibility that that the market may reach and eventually exceed the strike price. In most cases, it is best Read more…

DEBIT SPREAD

In simple words, an investor purchases a higher-premium option and sells a lower-premium option in a debit spread, Example: Trader, Bull:  Stock F@$10 Buy:             Call:$9/stock     Stock F   100   Prem:$120 Write+Sell:  Call:$11/stock   Stock F   100   Prem:$90 Trader, Bear:  Stock F@$10 Buy:            Put:$11/stock     Stock F   100   Prem:$120 Read more…