Category Archives for Glossaries

Covered Calls

In a covered call trade, you are buying the underlying stock shares and selling call options against it. This strategy is best implemented in a bullish to neutral market where a slow rise in the market price of the underlying stock is anticipated. This technique allows traders to handle moderate price declines because the call […]

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Bear Put Spreads

A bear put spread is a debit spread created by purchasing higher strike puts and selling lower strike puts with the same expiration dates. This strategy is best implemented in a moderately bearish market. It provides high leverage over a limited range of stock prices. The profit on this strategy can increase by as much […]

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Bear Call Spreads

A bear call spread is a credit spread created by purchasing a higher strike call and selling a lower strike call with the same expiration dates. This strategy is best implemented in a moderately bearish or stable market to provide high leverage over a limited range of stock prices. The profit on this strategy can […]

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Put Options

Put options give the buyer the right, but not the obligation, to sell an underlying asset at the strike price until market close on the 3rd Friday of the expiration month. Just like call options, put options come in various strike prices depending on the current market price of the underlying instrument with a variety […]

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Buying Puts

In the long put strategy, you are purchasing the right, but not the obligation, to sell the underlying stock at a specific price until the expiration date. This is used when you anticipate a fall in the price of the underlying stock. A long put offers unlimited profit potential with limited downside risk. It is […]

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Case Study: The Anatomy of a ‘Collar’: An Options Strategy That Only The Wealthy & Privileged Know About!

How Mark Cuban, a ‘Billionaire’, Saved a Billion Dollars By Utilizing This One Strategy! For years now, stockholders have “collared” shares to lock-in gains, especially when the stock represents a significant percentage of a person’s net worth or overall portfolio. The bursting of the dotcom bubble has brought prominence to some of these collars, including […]

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How Options Work

Options are the most versatile trading instrument ever invented. Since options cost less than stock, they provide a high leverage approach to trading that can significantly limit the overall risk of a trade or provide additional income. Simply put, options buyers have rights and options sellers have obligations. Buyers have the right, but not the […]

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5 Reasons Why Stock Option Trading Is Perfect For You!

1) You can purchase a stock option for a fraction of the cost of buying the underlying stock…which means you can start trading stock options with a much smaller amount of money. 2) You can make money trading stock options in UP, DOWN or SIDEWAYS markets – year in and year out.  How much of […]

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What Affects Equity Option Prices?

Option pricing is based on a variety of factors. There are seven main components that affect the premium of an option. These are: 1. The current price of the underlying financial instrument. 2. The strike price of the option in comparison to the current market price (intrinsic value). 3. The type of option (put or […]

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