Key Takeaways Market makers are intermediaries—professional traders paid to take risk and provide liquidity to the market Market makers engage in arbitrage, using proprietary algorithms and mathematical models The competing objectives of market makers, institutional players, and retail traders can make for a vibrant, competitive marketplace So, you’ve done your research, logged into the trading platform, […]

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Key Takeaways A standard equity options contract is based on physical delivery of 100 shares of stock Some broad-based index options are cash settled, with a multiplier of $100 times the index Futures contracts—and the options based on them—vary in size and tick value You don’t check the water in the middle of a swan […]

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Key Takeaways Go one step beyond textbook definitions and understand trading terminology from an option trader’s perspective Learn how investing terms can be applied to your trading and how to find them on the thinkorswim® platform Understand the Rule of 16 and how it can be used to estimate expected price ranges The jargon of investing […]

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Key Takeaways Making a trade involves a crossing of the bid/ask spread by one of the parties to a trade Basic order types include market orders and limit orders Slippage is the difference between an order’s expected fill price and the actual transaction price If you trade options—or stocks, futures, or anything, really—you know that […]

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Key Takeaways A long call option can be used as an alternative to the outright purchase of stock, but there are trade-offs and risks Long options strategies offer defined risk and potentially efficient use of capital Some advanced traders use the bullish diagonal spread as an adjunct to the stock replacement strategy Some retail investors […]

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