After an earning event, stocks can experience a sudden price change depending on the way the market interprets the company’s performance. This can be an opportunity for traders to capitalize on this volatility using options trading strategies. In this article, we offer a backtested strategy to help traders identify potential trading opportunities following a price shock. We’ll use Google Colab, a popular online platform for data analysis and machine learning, to backtest our strategy and provide key takeaways from our findings. By the end of this short article, you’ll also be able to perform y ..read more

When you hear talk about in-the-money or out-of-the-money options, it’s the concept of option moneyness at play. This simple yet vital concept in options trading describes the relationship between the current market price and the strike price of an option. Understanding moneyness of options can help you spot the intrinsic and extrinsic value of your investments. This article will explain what moneyness is in options, from its definition to its three categories: in-the-money (ITM), at-the-money (ATM), and out-of-the-money (OTM). Key takeaways Option moneyness describes the connection between t ..read more

Sometimes you want to gain a little bit more flexibility in your options trading strategy. That’s where rolling options come into play. This is a method of adjusting or extending options contracts, helping you manage risk and possibly maximize profits or curtail losses. This guide will provide a clear introduction on how to roll options and why you may choose to do it. Key takeaways Rolling options is a way to adjust or extend options contracts to manage risk and maximize profits or reduce losses. When rolling an option, you’ll aim to extend the expiration date or adjust the strike price, dep ..read more

Among the many types of option spreads that can improve your trading routine, diagonal spreads for income are something you should check out. This strategy involves taking a long and short position in two options with different strike prices and expiration dates. This article will provide you with the basic information you need to confidently include these strategies in your trading toolkit. Key takeaways Diagonal spreads for income are an options trading strategy that combines a long and short position in two options of the same type with different strike prices and expiration dates. To buil ..read more

When markets go down, bearish option strategies can be a great idea to balance your portfolio. These strategies, which may involve buying put options or using spreads, limit risk while maximizing potential gains. In a bear market, these could be your best option strategy for turning falling prices into profit opportunities. Let’s look at a few bearish option strategies and how to utilize them effectively. Key takeaways Four common bearish option strategies are the long put, naked call, bear put spread, and bear call spread. For those with strong convictions that a stock will fall, the long pu ..read more

When you first approach option trading, a long call strategy may seem like the most intuitive choice. And for good reason – it’s a simple, yet potentially profitable strategy. Which factors can help your likelihood of success, and how can you improve your long call options strategy? Let’s look more closely at these questions. Key takeaways A long call options strategy lets you profit from an increase in the underlying stock’s price. The loss potential of a long call option is limited to the option premium, while the profit is uncapped and increases linearly above the strike price. Unusual vol ..read more

It’s the end of March, and it’s time for the Q1 2024 version!  We continuously improve our platform and listen to your requests in order to keep Samurai the best platform for options investors and help you keep your edge in the market.  For this version, we’ve made considerable improvements to the scanner in anticipation of our custom strategy scanner. We’ve improved the home page to be more ‘card’- based and added breadcrumb-based navigation to help you quickly dive in and out of the results without losing context and information. Additionally, we’ve added more Excel templates and ..read more

Learning when to sell call options is crucial for any trader. This article offers a few quick tips on making this decision, whether you’re holding a long or short call position. With a long call, selling before expiration might be wise if you’ve met your profit goals or time decay is affecting the option’s value. On the other hand, selling a short call, or naked call, could be advantageous when expecting the stock price to remain stable or decrease. Key takeaways When deciding when to sell call options, you will need to consider whether you are holding a long call or a short call position. Wh ..read more

Backing your options trading with a fundamental analysis can give you an edge in the market. You can achieve this result in only a few minutes by using our Reverse DCF Option Strategy Excel Template. With this template, you can easily calculate the implied growth rate of a stock and build different option strategies based on your analysis. This can help you make informed trading decisions and increase your chances of success in the market. Key takeaways The Reverse DCF model can help you find potentially undervalued or overvalued stocks. This Excel template makes it easy to calculate the impl ..read more

In simple terms, understanding the intrinsic value of an option is fundamental for traders. This guide will help you understand and memorize how to calculate the intrinsic value of a call option or put option by comparing the strike price with the current market price. Key takeaways The intrinsic value of an option represents the value an option would have if you chose to exercise it today. You can determine an option’s intrinsic value by comparing its strike price with the underlying security’s current market price. OTM options have no intrinsic value, as they only have extrinsic or time val ..read more