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

While shorting volatility can be a good idea on many occasions, there are times that a trader may want to long volatility. That is, initiate a trade when volatility is low and close the trade for a profit when volatility increases. This is especially apropos when the VIX volatility index is at its lowest and seems unlikely to go much lower. There are many ways to go long the VIX. Today, we will look at using the out-of-the-money (OTM) butterfly option structure. Contents The Inverse Relationship Between SPX And VIX How Do We Go Long On The VIX? The Greeks Summary The Inverse Relationship Bet ..read more

*Gasp*  No, can it be? What risks can such a popular options strategy possibly have? Don’t get me wrong. The Wheel Options strategy has advantages, such as selling premiums on calls and puts. Buying stocks at a lower cost basis. Supplementing with additional income on stocks you already own. And all the other benefits that you already know about. But it is also important to understand some of its drawbacks. All options strategies have drawbacks. And the Wheel is no exception. Contents High Capital Requirement Buying While Stock Is Going Down Opportunity Cost Capped Profit Potential Undef ..read more

Today, we’re looking at how to reduce gamma on an iron condor. Mastering this technique could be the difference between a solid profit and a significant loss. Contents Introduction Reducing The Width Of The Spreads Rolling The Short Strikes Out Adding Cat Ears Conclusion Introduction Let’s say that a trader has an iron condor that has progressed into the following position. Date: Jan 2, 2024 Price: RUT @ 2006 Long one Feb 2nd RUT 1850 put Short one Feb 2nd RUT 1875 put Short one Feb 2nd RUT 2150 call Long one Feb 2nd RUT 2175 call Delta: -0.63 Gamma: -0.08 Theta: 15.30 Vega: -46.48 The trad ..read more

Contents Moving Averages MACD Lagging Span Leading Span A and B Conclusion The Ichimoku Kinko Hyo is a trading system that comes from the East. It was invented in the 1960s by a Japanese journalist named Goichi Hosoda, who went by the pen name of Ichimoku Sanjin. In the West, it is better known as the Ichimoku Cloud indicator, which can be found in many trading platforms. Upon first glance at the indicator, even the names of the parts are quite foreign: Translating the terms to Western names will make it less foreign: However, the system uses many of the concepts we are already familiar wi ..read more

A natural question that traders coming to a new strategy often ask is, “How much can this strategy make?” A better question is, “How much drawdown can this strategy suffer?” A more realistic question traders should ask is, “How do I feel when I trade this strategy through its ups and downs?” When it wins, am I disappointed by the amount? Am I satisfied? Do I wish more? When it loses, am I still able to sleep? Am I fine with it? Or does it frustrate me to no end and cause me to want to abandon the strategy? I can not answer the latter questions for you. But I’ll try to rummage through the web t ..read more

The “Wall Street Cheat Sheet” has been around forever; it’s just been known by many different names. It visually represents what drives every market everywhere: human psychology. By understanding the nature of market psychology and how it affects market cycles, you can better prepare for them and make more informed investment decisions. Below, we will look into each section of the Cheat Sheet, some of the major characteristics, and potential ways to trade them. Contents Disbelief Hope Optimism Belief/Thrill Euphoria Complacency Anxiety/Denial Panic/Capitiulation/Anger Depression Conclusion D ..read more

Contents The Platform The Options Flow Historical Flow Flow Overview Dark Pool Levels and Chart Analysis Alerts/Unusual Flow Pricing Verdict Many tools are available to today’s retail options trader, but few are as important as one that can let you see the markets under the hood. That is exactly what Cheddar Flow markets itself to do. CheddarFlow is an options order flow platform specializing in catching unusual options trades, dark pool prints, and a powerful AI alert system, but is it worth the money? That’s what we aim to find out in this review. The Platform First up is the platform itse ..read more

There was an uptick in trading and online chess during the pandemic in 2020. The popularity of chess was further spurred that same year by Netflix’s release of its popular mini-series The Queen’s Gambit, named after a particular opening move in chess of the same name. Those who trade options and play chess may see the similarities between the two. Contents The Opening The Mid Game The End Game Final Thoughts The Opening Chess player: “I will start with the classic London System by moving my dark-square bishop out and then my pawn to e3 to defend it.” Options trader: “I will initiate a bull p ..read more

Since the introduction of Robinhood in the late 2010s, there has been an explosion of low-cost or no-cost brokers in the trading scene. But before these discount brokers arrived, you had fewer choices. One of the original choices was TradeStation. TradeStation was a one-stop shop for execution, charting, automation, and custom indicator development. They have continued pushing resources into their platforms and offerings, but are they still worth the commission compared to some other brokers? Let’s take a look. Contents Accounts and Services Securities Platforms Apps Pricing, Fees and Rates D ..read more