Key Takeaways Understand the difference between implied and historical volatility and how to use them to analyze overall options volatility Know how to analyze relationships between options prices and other metrics such as options greeks and volatility values Learn how to apply implied volatility, historical volatility, and price relationships to help make options trading decisions […]

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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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Key Takeaways A long options straddle involves the purchase of a call and a put of the same strike and expiration date A long options strangle is a long out-of-the-money (OTM) call and a long OTM put of the same expiration date Time decay is a major risk consideration with options straddles and strangles Traders […]

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Key Takeaways The cryptocurrency market is maturing, although still quite volatile Cryptocurrencies could potentially be considered a viable alternative investment for portfolio diversification According to legend, it was a little over 10 years ago when a person or group operating under the pseudonym Satoshi Nakamoto logged the first entry into the bitcoin ledger. Fast-forward to […]

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Key Takeaways Theta measures the rate at which an option will theoretically decay in price All else equal, theta accelerates as expiration approaches Options strategies that target theta decay include short vertical spreads, iron condors, and calendar spreads Got a little time? Interested in options trading strategies that target the passage of time? This article is […]

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Key Takeaways Estimate the likelihood of an option being in the money (ITM) at expiration with options delta or the Probability ITM feature As expiration approaches, the delta of an in-the-money option approaches 1.00, and the delta of an out-of-the-money option reaches zero Comparing options delta to the price of an option can help inform […]

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