Category: Options

  • The Profit of a Trade: How I made $1,700 in 12 days By Selling A Call Vertical (Paper Trading)

    IBM is doing exactly what I wanted to. You can read about my bearish play on the stock in my most recent blog post here. As of March 24th, I’ve made $1,728 on the 10 contracts I placed 12 days ago in my paper trading account. When I placed the trade on March 12th, the […]

  • Back to Basics: How to Make Money

    My dad introduced me to trading when I was 16. After some hesitancy in the beginning, I jumped in feet first. Got my options trading certificate from tastytrade.com. Traded options for quite a few months. Lost money (lost a lot on a Brazilian ETF that still causes me pain to think about) Got scared. Quit […]

  • The Inverse Skew on Gold

    Implied volatility is the measure of the volatility of the price of a security. It increases when the market is bearish (when things are going down) and decreases when the market is bullish. When things are going better (up market) people are less nervous (down volatility). But when there is tumultuous economy, the VIX will […]

  • The Relationship Between Oil and Credit Markets

    What happens to the bond market when the oil futures move? Crude oil has hit almost a 5-year low, dropping down to $42.74 a barrel. The movement comes from output increases from resource-rich countries of Nigeria and Libya, who are unrestricted in how much they can supply. There are signs of rising production all over […]

  • Delta and Theta – How to Manage Your Risk

    Delta is an estimate of the amount of gain or loss with a 1-point change in underlying price. Standard deviation works into this mathematically as a normal distribution. A delta of 16 correlates to 1 standard deviation away, a delta of 32 correlates to 2 standard deviations away, and etc. The best way to look […]

  • The Correlation Between Equity Markets

    Correlation is simply a measurement of how stocks move relative to each other. Simply enough, the SPY and VIX have a NEGATIVE correlation, whereas the SPY and IWM, RUT, and other broad based market indexes have positive correlation. A quick recap on correlation – a positive correlation means that the securities move up and down […]

  • Convexity: It’s Not That Complex

    Convexity is essentially the “measure of the sensitivity of the duration of a bond to changes in interest rates”. It basically tells us how much a change in interest rates will effect the price of a bond that we currently own. Bonds supply traders with two types of incomes, a series of periodic coupon payments […]

  • All That Glitters is GLD

    The Feds are on the move, raising interest rates twice in 3 months (after an 8-year dry spell). The so-called “Trump Rally” is stagnant, nearing on the side of faltering. Basically, the economy is moving. There’s underlying tension, a certain uncertainty that cannot be named. So what’s a trader to do? Turn to gold.

  • Duration Trumps Direction

    Duration is an interesting variable to play around with. In bonds, the longer the duration, the more risky the bond is (thus the more it pays). In stocks, most people tend to just buy and hold, so duration can either be very good (the stock increases over time) or very bad (the stock decreases over […]

  • High Beta vs. Low Beta

    Beta is the volatility measure of a portfolio compared to the entire market. The market has a beta of 1, so we look at stocks relative to that number. A beta greater than 1 would mean that the stock is riskier (but that also means there are higher rewards) and likewise, a beta less than […]