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A previous post covered debit spreads, when you pay a debit looking for a stock or ETF to move in a certain direction. Credit spreads are just the opposite, with traders collecting premium up front in hope that the stock won't move a certain way. What a Credit Spread...
Editor's note: This post, part of a four-part series about options Greeks, was originally published on Tuesday, August 14, 2018. Some traders may be confused by options, especially their use of Greek letters. Delta, gamma, theta, and vega. How to remember what they...
Editor’s note: This post, part of a four-part series about options Greeks, was originally published on Monday, August 20, 2018. We previously looked at delta. Delta measures how much an option changes in price when the underlying stock or ETF fluctuates. Calls...
Editor’s note: This post, part of a four-part series about options Greeks, was originally published on Tuesday, August 28, 2018. So far, we’ve looked at delta and gamma. This week, we’ll turn to theta. Theta: T is for “time decay.” Theta measures how...
Editor’s note: This post, part of a four-part series about options Greeks, was originally published on Tuesday, September 4, 2018. So far we’ve reviewed three options “Greeks,” with memory tricks for keeping them straight: Delta: D is for direction.Gamma: G is for...
Options are an important tool for many retail investors. They can either replace trading shares, or make it easier to position oneself in stocks. Let's consider the first things options traders need to know. An Option's Price Is Usually Called 'Premium' There are some...
While options can be traded by themselves, investors often use them in conjunction with other securities. So before going further, let's consider the four basic ways that options trades are structured. You Can Trade Options by Themselves As we learned in a previous...
Most clients understand buying and selling stocks. Options are similar, and can be traded in the same brokerage accounts. However, you should know some basic differences. Bid / Ask Spreads Matter A bid/ask spread is the difference between where you can sell a security...
Options confuse a lot of investors because several factors impact their value. Unlike stocks, they don't just go up and down based on supply and demand. This post will explain three of the most important concepts you need to get started: time, volatility and intrinsic...