With options expiring every week, the possibility that your underlying will be close to the strike price on the day your contracts expire is something you should take into account. These cases are famously called “pin risk options.” This article will tell you more about what pin risk is and how to use a logical approach to deal with it. Key takeaways Pin risk is the risk associated with options expiring near the strike price, causing uncertainty over assignment This risk can leave options traders with unhedged positions over the weekend, making them vulnerable to market movements. Looking at ..read more

As we create, test, and release new features, we always make sure they are easily accessible on our mobile site. Whether you’re checking out unusual options volumes, evaluating trading strategies, or paper trading with options, it does not matter: all our features are mobile-friendly. Here is a quick list of some ideas you can use on the go. Table of Contents Toggle Tip #1: Spot Options with Unusual Trading Volume to Follow the Big Players Tip #2: Trade Stocks after a Huge Price Change Tip #3: Check out a Strategy to Trade in the Earnings Season Tip #4: Never Miss an Analyst Upgrade Tip #5 ..read more

The Zebra option strategy simplifies managing directional risk in the market and represents a nice way to replicate stock ownership without heavy investments. Whether you lean bearish with a put Zebra or bullish with a call Zebra, this approach strips away extrinsic value for a more cost-effective and risk-managed trading experience, mirroring the benefits of married puts or calls, but with a twist. Today’s guide will tell you more about this strategy family. Key takeaways The Zebra option strategy replicates stock ownership without requiring a high capital outlay. You can set up a bearish (p ..read more

While many strategies in options trading rely on a perfectly symmetrical setup, the broken wing butterfly option strategy introduces a degree of asymmetry to manage directional risk. This method changes the traditional butterfly spread to offer potentially higher returns with controlled risk. In its credit and, especially, debit form, this strategy represents a potential great addition for your trading toolkit. Let’s learn more about this strategy in today’s guide. Key takeaways The broken wing butterfly option strategy is a trading setup that modifies the traditional butterfly spread for pot ..read more

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