Strategy

What is a Diagonal Spread? If you read the recent post on Calendar Spreads, you will understand how Diagonal Spreads work fairly easily as they are simply a cousin or variation of the calendar. A Diagonal Spread is created by buying a call or put option further out in...

What is an Iron Condor? An iron condor is simply two credit spreads combined into a four legged spread trade. The iron condor is made up of a short put credit spread below the current stock price and a short call credit spread above the current stock price and ideally...

What is a Calendar Spread? A calendar spread is a strategy using two options in different expiration cycles. With one option being long and the other being short using the same strike prices but in separate months, hence the calendar name. These spreads are opened at...

What are Covered Calls? Covered calls are just about the most popular options trades whether you’re a beginner starting out learning how options can supplement your stock holdings or if you are a large fund using covered calls to overwrite long term stock positions....

My previous post on Butterfly Option Spreads went over the basics of how to create a butterfly and when they are best used. Now let's look deeper into the many options for alternative butterfly strategies to see just how flexible options really are. As we know the...

What is a Butterfly Option Spread? Butterfly spreads are one of my favorite strategies to use in volatile or choppy markets when you are expecting a specific price zone to be hit and implied volatility to drop. This is common to use for a catalyst like earnings...

Intro to VWAP Volume Weighted Average Price (VWAP) is basically what it sounds like. The average price weighted by volume. The VWAP equals the dollar value of trading periods divided by the total trading volume for that current day. By paying attention to VWAP you can...

The last several posts discussing the Greeks went over Delta and Theta. For the third post in the series on Options Greeks we will cover Vega, which is related to how implied volatility factors into options pricing. Understanding how implied volatility affects options...