Tag: licensed financial adviser
Turning a Butterfly into Black Swan Hedge
Let’s look at a hypothetical example where a broken-wing butterfly options structure can be turned into a black-swan hedge. In the process, we can explore the concept to see if…
Read More »Don’t Get Screwed Trading the Poor Man’s Covered Call
The Poor Man’s Covered Call (PMCC) is a strategy that mimics the traditional covered call but requires significantly less capital. Instead of owning the underlying stock, traders buy a long-dated…
Read More »How To Trade The Inverse Cup And Handle
The Inverse Cup and Handle is the bearish counterpart to the popular Cup and Handle setup. The chart pattern is just as simple; it consists of a large inverted “U”…
Read More »Blocks, Sweeps, and Splits: Do You Know What These Are?
Blocks, sweeps, and splits — oh my. More new terms to know. Contents Block Order Sweep Split Order Summary These describe how orders are consolidated in an options order flow….
Read More »What Is The Theta Of A Credit Spread?
Contents When Do Credit Spreads Become Theta Negative What About Debit Spreads? Conclusion If you answer that credit spreads have positive theta, that is only partially correct. It depends on…
Read More »Controlling the Vega of Calendar Spreads
From our previous study, we know that calendar time spreads have positive vega. Vega is one of the options Greeks use to inform us of how the trade will profit…
Read More »Triple Tops and Bottoms: What Are They And How To Trade Them
Triple tops and bottoms are powerful chart patterns that signal potential reversals in the market. These patterns can help traders either enter new trades to capitalize on the potential reversal…
Read More »Decreasing the Risk Of Credit Spreads With Iron Condors
As options traders or investors, we must be aware of the trade risks and learn how to control them. Whether we are trading a short-term credit spread or investing in…
Read More »Calendarizing a Butterfly Spread
Last time, we showed the adjustment technique, using a calendar to defend an iron condor. This time, we use a calendar to defend a non-directional butterfly. In the condor case,…
Read More »What is the maximum risk of a calendar options spread?
The max risk in a calendar options spread is the debit paid for that calendar, provided that the trade is exited at or before the expiration of the near-term option….
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