In the world of options trading, understanding implied volatility (IV) is crucial. But what exactly is IV and why does it matter? Let’s explore. What is Implied Volatility? In simple terms, implied volatility measures how much the market expects a stock’s price to change in the future. It is implied by the prices of options […]
What are put options? Put options are a type of financial contract that gives the holder the right, but not the obligation, to sell an underlying asset at a predetermined price (known as the strike price) on or before a specific date in the future. In simpler terms, it’s like buying insurance for your stocks […]
A Covered Call is a popular financial strategy, but what exactly does it entail? A Covered Call is often used by investors seeking to generate a consistent income stream. It involves owning or buying shares of a stock, and then selling call options on those shares. Think of it this way: you own a house […]
In recent years, more and more traders have turned to VXX as a strategy for earning recurring income. But what is VXX exactly? VXX is an exchange-traded note (ETN) that tracks the Volatility Index, also known as the VIX or “fear index.” This index measures expected market volatility over the next 30 days using S&P […]
Reason 1: Technical Analysis cannot predict the future People who say Technical Analysis does not work think TA is a tool to predict the future. I must admit I was one of them. Obviously, no one can predict the future. What people misunderstand is that TA is a tool to provide “actionable points” in the […]
Do you want to read the VIX? A quick answer is to watch the S&P 500 movement and its options. They have a strong inverse correlation. However, VIX also exhibits an interesting weekly pattern. Have you ever noticed that VIX seems to go lower on Fridays (VIX Weekend effect) and jump back higher on Mondays […]
I bet you probably thought this was going to be another “buy VIX future or options to prepare for a market crash” article. Sorry to disappoint you but I am not going to recommend that in this article. What I will discuss though, is provide some examples of how using VIX, VIX9D, VIX3M, and VIX6M […]
It’s that time of the year again when stocks typically underperform. The end of Summer and the beginning of Fall. Don’t ask me why but that’s what the data tells us (see graphs below). There are multiple theories as to why this happens every year and as a human, we like to attach a simple […]
After the recent minor market corrections largely due to inflation fear, I have seen so many people discussing and asking what they should do with their losing positions on various online forums. I feel for them because I used to be one of them. This doesn’t mean I don’t hesitate any more and just close […]
Are you a trader looking for a strategy that can provide recurring income? Then the options wheel strategy might be just what you need. This popular trading technique involves using option contracts to generate consistent profits from underlying stocks. Understanding the Wheel Strategy Step 1: Sell a Put Option – The first step in the […]
December typically is when everybody slows down and celebrates holidays. So naturally one would think the market volatility should also decline in December. I decided to do a quick calculation with VIX historical data (2004 – 2017) to find out if VIX has always gone down in December from November. While the calculation methods I […]
Short-selling PUT is done when one is expecting the underlying equity would go up. I know open positions in anticipation of VXX going up is not a good strategy in the long run. VIX and VIX ETPs are most of the time in contango, so a question I had was “Would option time decay be […]