Tag: options

Volatility Skew Information

Volatility Skew – situation where individual options on a particular entity have different implied volatilities that form a pattern  – the pattern can be a...

Put – Call Ratios

The trading volume of put options to call options indicates the Investor Sentiment How to interpret put-call ratio: – higher ratio: time to sell but...

Options Trading Glossary

Backspread Any spread in which in-the-money options are sold and a greater quantity of out-of-the-money options are bought. In a more general sense, it may...

6 Steps to a Trading Decision

1. State your Forecast – important to be specific about price of stock and time frame e.g. XXX stock will rise from $10 to $15...

Trading Strategies

1. Stock- Oriented Strategy – Covered Straddle – Normally price rise, sell shares to realise profit. Price drop, buy more shares. – BUT Alternative to...

Option Price Behaviour

1. Strike Price – if the stock price don’t move beyond the strike price, then the option will expire worthless 2. Time to Expiration (time decay) –...