Is There A ‘Free Lunch’ In Options?
Steady Options
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2w ago
Figure 1 TLRY iron fly on 13 September 2018 Options have infinite combinations but the classic hypothetical risk free trade is the credit spread with a wing width that is smaller than the credit collected. Naysayers will tell you that in this age of algos and massively automation driven trading such pricing differences and arbitrage are polished off immediately. The chart above – however – is a real one and the pricing of the TLRY spreads endured over a fairly extensive period, it seemed in fact a free lunch was available. Others will argue that spread differences set by market makers make ..read more
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What Are Covered Calls And How Do They Work?
Steady Options
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1M ago
Covered calls are popular among investors looking for a conservative way to generate additional income from their stock holdings. However, it's essential to understand both the benefits and risks before implementing this strategy.   Example of a Covered Call: Long Position: You own 100 shares of XYZ stock, currently trading at $50 per share.   Sell Call Option: You sell a call option with a strike price of $55 for a premium of $2 per share.   Outcomes: Stock Price Below $55: The call option expires worthless, you keep the premium, and you still own the shares.   Stock P ..read more
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SPX Options vs. SPY Options: Which Should I Trade?
Steady Options
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3M ago
What's the Difference Between SPX and SPY Options? Dividends Dividends are not normally paid to options holders. However, SPY pays a dividend every quarter. This is vital because if you trade with in-the-money (ITM) call options, you can exercise them to collect the dividend. To do this, you need to exercise your options on SPY before the ex-dividend date or own shares and place a call (called a covered call option).   It is important to be alert when trading ITM calls because most calls are exercised for the dividend on expiration Friday. Therefore, if you own ..read more
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Yes, We Are Playing Not to Lose!
Steady Options
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3M ago
A few weeks ago we introduced a new strategy to our members. While a double diagonal spread is a well known strategy, we are trading it with a tweak. One of our members have mentioned that "I realize they are lower risk in the sense that they can be open longer without big losses, but feels to me like playing not to lose."   Here is a response from our contributor @Yowster who introduced the strategy:   Well... Lay me outline reasons why I like them (and I've been doing a ton more of them in personal trades in addition to the official ones, and are tracking even more of them ..read more
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The Impact of Implied Volatility (IV) on Popular Options Trades
Steady Options
by
3M ago
This article will shows how this works, and how IV can affect your decision on what type of trade to open.   Directional Spreads Let’s start with the simplest of options spreads, the put or call vertical spread which is often used as to place a trade for a stock to move in a certain direction.   Here’s a slightly OTM (Out of The Money) call vertical debit spread on AAPL about a month away from expiration (a popular spread to play for stock price to rise).  The stock price is $182 and the call vertical is long the 185 call and short the 190 call.  Note the highlighted ..read more
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Please Follow Me Inside The Insiders
Steady Options
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3M ago
Insider Buying and Selling In doing so we are competing with quant-based analysis that is poring hundreds of millions of dollars into similar things and rarely does the retail investor get a peek in with any edge. Courtesy of regulation, however, there are a number of things that we – the retail investor – can see as well (or as poorly) as anyone else and one of those things is insider buying. Due to grey zones in reporting and execution of trades, the exact timing is not what matters the most, it is simply a head’s up that insiders are buying.   Why is this meaningful, well to quote one ..read more
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Trading Earnings With Ratio Spread
Steady Options
by
4M ago
Ratio trading the earnings Everyone knows what a ratio trade is right? A ratio can be found in many shapes, forms and directions, the SO beloved Hedged Straddle is a ratio whereby a larger number of long positions are offset (in part) with short positions that are closer in time. Its a more sophisticated version of the humble sell 1 short ITM and buy 2 long ITM (whether with calls and puts) for zero cash outlay (or even a minor cash+ or cash -) except margin. This article is my own reflection of the use of this option strategy but inspired partially by what I learnt here on SO. I give i ..read more
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SteadyOptions 2023 - Year In Review
Steady Options
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5M ago
Performance Dissected Check out the Performance page to see the full results. Please note that those results are based on real fills, not hypothetical performance, and exclude commissions, so your actual results will be lower, depending on the broker and number of trades. Please read 2023 Year End Performance by Trade Type for full analysis of our 2021 performance. We have extensive discussions about brokers and commissions on the Forum (like this one) and help members to select the best broker.  The 112% annual return was pretty typical, compare ..read more
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7 Skills You Have To Master To Play In The Asset Management Space
Steady Options
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6M ago
This skill is about blending analytical prowess with a dash of intuition. Think of it as chess, but the pieces are stocks, bonds, and the occasional cryptocurrency.   Via Pexels   The Art Of Calm And Portfolio Diversification In asset management, not putting all your eggs in one basket isn’t just good advice; it’s a survival tactic. Diversification is your financial calm. It’s about balancing different asset types to mitigate risk. Imagine a tightrope walker juggling while crossing Niagara Falls; that’s you balancing equities, bonds, and alternatives. The goal? Not falling into the ..read more
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Call And Put Backspreads Options Strategies
Steady Options
by
8M ago
In both cases a (usually near the money) option is sold and used to partially fund the purchase of two (or more) out of the money options. Let’s see an example:   Let’s say Apple was $710 in the beginning of September and we thought it was going to rise in value, quickly. We might put on a call backspread: Sell 1 AAPL Sep 710 Calls Buy 2 AAPL Sep 720 Calls It might cost us $50. Here’s the profit and loss diagram:   As you can see if we are correct, and AAPL rises, we will enjoy any rise over $720; for every $1 over $720 we make $100 profit. All for an investment of $50. So you ..read more
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