Calendar spreads are typically thought of as having positive theta, meaning they gain value over time. This is true only of calendars where the strike price of their options are near-the-money. For example, below is a typical at-the-money calendar on SPX with the short put option 22 days to expiration. And four days after that, the long put option. Date: March 15, 2024 Price: SPX @ $5117 Sell one April 8 SPX 5115 put @ $52.30 Buy one April 12 SPX 5115 put @ $59.20 Debit: -$690 The Greeks are: Delta: 0.13 Theta: 3.5 Vega: 43 Currently, the trade has a positive theta of 3.5, which means time is ..read more

Iron Condors are a staple among option traders but setting them up and correctly managing them can be a bit challenging. Some people assume it’s as simple as just selling two verticals and calling it a day, but that couldn’t be further from the truth. In this article, we will look at the steps to select the right options, structure the condor correctly, and the proper way to manage the trade for maximum profit and minimal risk. Whether you are a new Iron Condor trader or have been trading them for a while, odds are you will pick up some helpful tips from what we discuss below. Contents Creati ..read more

Contents Introduction AIC22 Trade Configuration Frequently Asked Questions Final Thoughts The AIC22 is a market-neutral options strategy that is designed for all market conditions. It is not a completely new strategy. Various incarnations of the strategies have been around for years with names such as the Weirdor and the 14-day asymmetric iron condor. These are all strategies within the iron condor family. Introduction In March 2024, Amy Meissner updated and revamped the strategy and dubbed it with the new name of AIC22. It is clear that the “AIC” stands for asymmetrical iron condor. But it ..read more

With trading available on mobile phones, you can sell bull put spreads from anywhere, perhaps even at a beach in some exotic country. But we are actually talking about where on the option chain we should be selling bull put spreads. At what delta? Should we sell at the money near the 50 delta? Or should we sell far out-of-the-money at the 15 delta? It depends on what characteristics you want your bull put spread to have. A spread at-the-money will have different characteristics than one far out-of-the-money. Let’s see what we mean. Contents Spread Near the Money Moneyness Of Options Intrinsic ..read more

Interest rates are the lifeblood of the financial world. They affect all financial instruments involved with the flow of money and time. A few examples of these are Bonds, Mortgages, and, you guessed it, Options. Regarding options, the influence of interest rates is fairly profound, especially as they move higher. They directly affect how options are priced, making it essential for traders to stay aware of potential shifts in monetary policy. Contents Introduction Understanding Options And Interest Rates How Do Interest Rates Affect Options Options Pricing Models And Rate Sensitivity Practica ..read more

Unusual Whales is an options analytics platform that mainly focuses on unusual options trades through monitoring option sweep and block trades. They have many other tools available, though, that make this platform slightly different than some of the other options flow platforms out there. They give users access to Gamma exposure across strikes and tickers, allow historical flow downloads, and follow/track high-profile portfolios such as Nany Pelosi and Dave Portnoy. These are just some of this platform’s features, though we will look at all the features Unusual Whales has and whether it is wor ..read more

Because the market is random to a large extent, there will always be uncertainty in trading. This we cannot eliminate. What we can control is how we respond to uncertainty. How we deal with uncertainty is important. Contents Introduction Mindfulness Cognitive Restructuring Acceptance of What You Can’t Control: Learning Opportunity Final Thoughts Introduction When animals and humans are placed in unfamiliar territory or uncertain situations, our brains’ amygdala triggers the fight-or-flight response. The amygdala is a small, almond-shaped structure located within the brain’s temporal lobe res ..read more

Contents What Exactly Is A Synthetic-Covered Call? Frequently Asked Questions Conclusion The YieldMax ETFs uses a synthetic covered call options strategy to generate income from underlying equities symbols. For example, the YieldMax ETF with the ticker symbol MSFO is based on the underlying asset of Microsoft stock (MSFT). Similarly, for the following YieldMax EFTs: ABNY – underlying stock ABNB (Airbnb) AMDY – underlying stock AMD (Advanced Micro Devices) MRNY – underlying stock MRNA (Moderna) PYPY – underlying stock PYPL (Paypal) DISO – underlying stock DIS (Disney) JPMO – underlying stock ..read more

It is impossible to predict where the market is going to go or when it is going to go there, so as a result, traders rely heavily on probabilities and statistics in planning their trades. There is no place in trading that this is more accurate than in options trading. In addition to the usual problems of getting the timing and direction correct on a trade, options traders have the added variables of theta decay and Delta to determine if their trade will be profitable. These make being able to identify the probability of an options trade vital to long-term success in the options markets. Here ..read more

Contents How Do We Know When To Take Profit? An Example Of A Trade That Doesn’t Work Conclusion What does that mean? A few definitions are in order here. The VIX, or the CBOE Volatility Index, is a popular measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. VIX is generally mean-reverting, which means it tends to revert to its historical average over time. While the VIX can experience high and low volatility periods, extreme levels are often followed by a return to more moderate levels. Traders know this and use mean-reversion as a basis ..read more