“Rolling” is a common way options traders adjust options positions when their forecast on the underlying seems wrong in the short-term, and they just want to buy a little more time for the trade to... more
What do you call a covered call that uses a high-delta LEAPS call option as its underlying, instead of a stock? We posed this question as an informal contest to Options Guy readers and got a flood ... more
When you sell an option as part of a multi-leg trade with two expiration dates, what’s the best way to exit the position? Today’s post takes a real-world client question and helps you better weigh ... more
Have you ever considered using a LEAPS call option as the underlying in your covered call, instead of a stock? Learn more about this common strategy twist here – plus, suggest a name for this strat... more
Many traders rely on stop orders to provide a quick exit in the event that the market trend turns against your position suddenly. However, contingent orders can work as an effective alternative to ... more
You may already be familiar with covered-call writing…but have you ever considered writing a covered call with a high-delta LEAPS call option as the underlying, instead of a stock? This post explai... more
If you missed my debut on CNBC’s Fast Money last Friday, I wanted to share this video link available on CNBC’s website. In this segment we talk about the VIX’s latest strange behavior, what it coul... more
Ever wondered where options prices come from? Far from arbitrary, options prices reflect diverse factors like time to expiration, volatility, interest rates and other drivers. Options prices also r... more
Are you brand-new to options – and want to jump-start your trading education on the right path? This post gives you five easy steps to start learning the basics of options, including ideas for sett... more
Summer’s a great time to expand your options trading skills. This post summarizes some of the best free educational resources for options traders. Whether you’re just beginning with options or adva... more
After hitting stratospheric highs last fall, the CBOE Volatility Index (VIX) is now hovering around 30, its lowest level since September 2008. What do lower VIX levels mean for future markets? And ... more
This post gives you the scoop on double diagonals, a versatile options strategy that not many traders know about. We’ll discuss what this strategy offers (a way to trade on a neutral market outlook... more
How can you tame the effects of volatility on time-decay options plays in this high-volatility market? This post explains the dangers of “volatility skew” to time-decay strategies like calendars. I... more
How should you manage volatility (or vega) risk on time-decay strategies during a high-vol market? This post provides some rules-of-thumb and other tips to help you plan a time-decay strategy with ... more
Imagine this scenario: you put on a bull call spread, the market moves in your favor…but the profit you reap is a lot less than what you’d expected? This post explains why that can happen, plus wal... more
What’s a double diagonal? How can you use this handy options strategy in your trading? In this, the first post in a three-part series, we’ll explore how double diagonals got their name (and explain... more
What happens if you enter a limit order at a certain price – then the market moves dramatically away from that price? How are trade prices established in that case? More importantly, do market make... more
Have you ever been tempted to buy low-cost options for your favorite stock? Many new options traders are intrigued by this move. But not all options traders realize how much of a long-shot these op... more
Many multi-leg options strategies include their own hedge, reducing risks for one leg by counterbalancing them with another leg. It seems clever enough to make a trader wonder: is it possible to ze... more
Picture this scenario: it’s expiration week, you bought an option contract that went awry, and now you’re just assuming it will expire worthless. You decide to play golf on option expiration Friday... more
