Not all volatilities are constructed equal. It is critical to differentiate between Historical Volatility and Implied Volatility, so retail traders learn how to trade options focused on what is material to theoretically price option spreads forward.Historical Volatility (HV) measures past price movements of the underlying asset recording the asset’s actual or realized volatility. The more [...]
If you are one of those who want to gain huge profits from stock options, then it is very important for you to understand the meaning of option trading. At times it can be difficult to learn the exact difference between trading in the stock market and trading in the stock options market. In fact [...]
There are four different types of players in the stock option trading game. They are buyers of calls, sellers of calls, buyers of puts, and seller of puts. The buyers are called holders, and the sellers are called writers. Buyers of calls are said to have a long position, while buyers of puts are said [...]
INTRODUCTION
Having been trading stocks and options in the capital markets professionally over the years, I have seen many ups and downs.
I have seen paupers become millionaires overnight…
And
I have seen millionaires become paupers overnight…
One story told to me by my mentor is still etched in my mind:
“Once, there were two Wall Street stock market multi-millionaires. Both [...]
Options Trading has a reputation for being extremely risky, but this reputation is in large part undeserved. True, option trades are extremely risky – even dangerous if you have no idea what you are doing. However, that is true of all forms of offline or online trading, and trading in options is no exception.
While options [...]
It is no secret that 2008 was a terrible year for most stock investors, and most probably things are going to get worst in the future. The US and the World economy are in a recession that will probably last at least for the rest of 2009. The recession translates into less demand for products [...]
The concept of Stock option trading was introduced in the 1970’s, and it became popular in 1980’s. However the market losses of 1990 caused a stop in this type of trading, the recent concept of electronic trading (online trading) made them again popular to the public.
Stock options are options, which use stocks as the [...]
There are two types of options available: call options and put options.
Call options give the taker the right but not the obligation to buy the shares at a specific price on or before a specific date.
The put options give the taker the right but not the obligation to sell the shares at a specific price [...]