Category: Options

  • Buying Power and BPR

    What exactly is buying power? As a small account trader, this is a number that I have to pay very close attention to, to make sure that I don’t have the potential of wiping out my entire account with one trade. The number basically is the maximum amount of money that I have to trade […]

  • How To Invest Actively in a Passive World

    Active investing gets a bad rap. People see it as a gamble on the marketplace, a risky venture to make a few quick bucks. They advocate investing in an index fund, which is seen as much safer and a way to generate larger returns. I feel as though active investing has been both underrepresented and […]

  • The Earnings Plight

    One thing that we have to pay attention to when we trade is earnings. I haven’t mentioned it very much on here, because I tend to trade ETFs (which don’t have earnings, most of the time), so I normally don’t worry about it too much. But when we have active positions in single stocks, it’s […]

  • Vega and Rho- The Forgotten Greeks

    Today, I was talking with one of my professors about how the different Greeks were mathematically derived (very stimulating conversation!), and I realized that I didn’t quite understand what Rho was. Or what Vega entirely was, for that matter. So I did some research!

  • Why I Believe in Active Investing

    Why do I support active trading, when only about 15% of all investors even work with options? Why do I actively engage in something that hardly any of my peers even know about? Why do I keep posting about how much better it is than passive trading, when clearly, the average person, the media, and the […]

  • Skew: Much More than Just Direction

    Skew is one of my favorite things. I’m not sure why, but I think the whole idea of it is absolutely incredible. The overall market skew is measured by the CBOE Skew index, but for our purposes, we like to examine the skew of the different financial securities. Applying skew to the market as a […]

  • Buying Power Reduction and the Risk-Return Tradeoff

    As a small-account trader, there’s a lot of different things that I have to pay attention to when I place a trade. I’ve mentioned many of the different variables before (Greeks, IV, etc.), but ANOTHER one is the buying power reduction. Buying power is the total capital available in our account. Buying power reduction is […]

  • The Key Tenets of Trading

    The market can be scary. This active trading stuff can be scary. I’m still reeling from some burns. I’m still nervous to get back into the market. (side note: I will be getting back into the market, and documenting my trades on here for everyone to see) But I have to remember the key tenets of […]

  • Liquidity: How to Make Those Trades Fluid

    I’ve touched on a lot of important aspects of the trading environment in my posts. The Greeks, trading small, trading often, volatility… but none of this matters unless we have a market that we can actually TRADE in. We can’t buy options if no one is willing to sell them to us. Likewise, we can’t […]

  • Kurtosis= What?

    When we have a stock, we like to look at the distribution of its returns to figure out the likelihood of certain outcomes. The 4 main things this distribution tells us is the average, or the mean, the standard deviation, 0r how spread out the data is, skew, or which way the data is “biased”, […]