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Identifying Support and Resistance Price Levels

Following up on the first post I wrote on an Intro to Chart Analysis, the next logical way to analyze price charts is by understanding how to identify support and resistance. These are pivotal aspects to knowing when to enter and exit directional trades and be...

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Why Volume and Open Interest Matter to Liquidity

In a few recent posts I discussed Options Bid/Ask Spreads and Liquidity as well as Expirations and Strike Prices. I mentioned that volume and open interest factor into liquidity when it comes to bid/ask spreads but I wanted to expand more about how and why these two...

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Intro to Chart Analysis

Intro to Price Charts Stock charts are simply a collective visual representation of all participants in the market and their actions displayed through supply and demand of the underlying stock. Since price does not lie, then understanding how to read a chart and...

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6 Mistakes Newer Option Traders Make

Trading options is more intricate than just trading stocks. The timing element of options makes it a great way to create a strategy based on what your views are with the underlying stock or implied volatility. It takes time to develop a strategy and use options for...

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Understanding Options Bid/Ask Spreads and Liquidity

Bid/Ask Spreads A bid/ask spread is the difference between where you can buy an option versus where you can sell an option. Sometimes called the offer, the ask price is the amount the market is willing to sell the option to you and the bid price is where the market is...

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Option Expiration Dates and Strike Prices

Option Expirations All options have an expiration date and that is partly how their values are derived. The time value till expiration is a large part of the equation and if you choose the wrong expiration for your trade horizon it can negatively impact your profit...

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Buying vs. Selling Options

As an option trader it's important to realize you have options, literally. A trader doesn’t have to only buy options in order to profit but can also sell options to open a trade and give themselves a much higher probability of profit. There’s different reasons why a...

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Intrinsic and Extrinsic Value of Options

One of the most important factors to remember with options is that they expire at some date in the future. Options premium is made up of two types of values: intrinsic and extrinsic. Intrinsic value is what value of the option has real value at expiration and...

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Understanding Call and Put Options

One of the key things to know about options is that each contract represents 100 shares of the underlying stock. If you sell an option contract for $1.00, that’s really per 100 shares, so you really sold $100 of actual value. Every option strike and expiration has its...

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Moving Average Crossovers to Trade Momentum

In the previous post I made about Using Stacked Moving Averages to Ride Trends I showed how I like to use the trend of exponential moving averages to take advantage of trading trends and being able to stay in them as long as possible. Now I want to discuss another...

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