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Article Archive For Tom Gentile
DownloadExplore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: The Scariest Two Months Of The Year...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Repairing Losing Positions...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: How I Trade November To May, Options Style...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: The Ratio Backspread...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Debit Spreads Or Credit Spreads ... Which Is Best?...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Good, Better, and Best ... Trading Summer Market Patterns...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: IPO Meltdowns...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: New Year's Resolutions for Options Traders...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Trading The Spring And Summer Energy Pattern...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Is Santa Claus Coming To Town...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Hot August Nights ... and Metals!...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Risk Reversals And Robbing Peter To Pay Paul...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: New Options For Options: Varying Expiration Dates...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Presidential Options (Part 1 of 2)...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Presidential Options (part 2 of 2)...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: What Not To Trade...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Moneyness And The Math Of Options...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: A Rare Option Opportunity...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Gold On The Move...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: To Straddle Or Not To Straddle...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Taking The Leap - What are LEAPS and how will they benefit you?...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: 'Tis The Season To Buy Commodities...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: The News Effect...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Bobbing for Long-Term Apples...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month in the column: Does Gold Look Brightest In The Midst Of Foreign Chaos...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month in the column: Are there opportunities in the technology sector...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: The Cost Of Doing Business...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Which way will oil and energy prices go as we head into the spring and summer months, and how can you trade these markets?...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month in the column: Protecting Your Smaller Stock Portfolio....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Getting in on the next Chipotle...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Natural Gas -- UNG & LNG...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Dogs of the Dow option strategies....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month in the column: Ideas for trading options on crude oil....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Nondirectional Trades: Straddling The Moves...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Putting An Option Lesson To Work...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month: Is Health Care The Ultimate Hedge?...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. This month: call options and Apple's September product launch....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile started his trading career on the floor of the American Stock Exchange in 1994. He has appeared on many financial TV and radio shows, as well as hosting a weekly talk show himself, and has co-authored many books on the markets. He can be found at www.tomgentile.com. This month, he provides some option-trading lessons from the poker machine....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. This month: A case study for options on coffee....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. This month: The "sell in May" strategy using options...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. This month: Rules for options traders....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. This month: fixing a losing stock position with options....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. This month: strategies for trading seasonal crude oil pullbacks if one is expected....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. This month: Dogs of the Dow strategy; dividend collection; and covered-call selling for risk management....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. This month: crude oil investments....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. This month: LEAPS vs. options....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. This month: gold....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. This month: trading the "easing" of quantitative easing using puts and bear put spread...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. This month: Curency Options....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. This month: Can options be daytraded?...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. This month: ""Last In, First Out"" - Want to trade options just one day a mon...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. This month: liquidity....
Butterflying Cattle With Commodity Options
ARTICLE SYNOPSIS ...Butterfly the strategy, not the steak!...
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. This month: the Santa Claus rally....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. This month: liquidity....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief option strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question for our Explore Your Options column, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. Contributing analysis is by senior Optionetics strategist Chris Tyler....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. Contributing analysis is by senior Optionetics strategist Chris Tyler....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. Contributing analysis is by senior Optionetics strategist Chris Tyler....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. Contributing analysis is by senior Optionetics strategist Chris Tyler....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. Contributing analysis is by senior Optionetics strategist Chris Tyler....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. Contributing analysis is by senior Optionetics strategist Chris Tyler....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. Contributing analysis is by senior Optionetics strategist Chris Tyler....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. Contributing analysis is by senior Optionetics strategist Chris Tyler....
Explore Your Options
ARTICLE SYNOPSIS ...Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. Contributing analysis is by senior Optionetics strategist Chris Tyler....
Explore Your Options
ARTICLE SYNOPSIS ...Is selling an at-the-money (At m) or outof-the-money (Ot m) option really better than selling a contract that has more premium attached to its market price due to its intrinsic worth? That's a tricky one. As for which type of sale constitutes the "better" one, we do know selling extrinsic or time premium associated with At m or Ot m has the advantage of time decay. All options do lose 100% of their extrinsic value by expiration. However, whether a contract lands in or out of the money and by what amount can prove to be the more important factor in calculating actual ...
Explore Your Options
ARTICLE SYNOPSIS ...What can be done to make the long butterfly strategy more consistently profitable?...
Explore Your Options
ARTICLE SYNOPSIS ...Which is considered better to own, intrinsic or extrinsic premium? That's a broad question with no absolute answer, though some may suggest that traders refrain from owning extrinsic premium. As option traders, we should recognize that all extrinsic or time value eventually drops to zero. At expiration, all that's left is real intrinsic value or the option has no worth whatsoever....
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...I've noticed many stocks see their strongest or weakest price levels in afterhours or premarket trade immediately following an earnings release. With the stock's listed options not open during those sessions, it seems an investor with a long call, if the move is up, could be missing out on exiting at more opportune levels. Why is this and do you see any changes in the future?...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...A smarter Call to sell? With a long call, what would be the best time to sell? I know that directionally, the higher a stock goes up the more the call stands to profit as it goes further in-themoney. But if a call went from out-of-the money toward being at-the-money, doesn't it put the option at more risk because of time decay?...
Explore Your Options
ARTICLE SYNOPSIS ...Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. Contributing analysis is by senior Optionetics strategist Chris Tyler....
Explore Your Options
ARTICLE SYNOPSIS ...Taking stock of a broken WinG If I'm bearish on a stock but wish to own shares at lower levels, would an out-of-the-money (Ot m) long put broken butterfly through assignment be a win-win spread to consider? I like the idea of participating in larger dollarpriced stocks such as Google (GO O G) or Apple (AAp l) for a credit with these two linked but somewhat different objectives in mind. At the same time, I am not completely sure of all the risks involved. Any light you shed on this would be greatly appreciated....
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...If I'm trying to manage option position risk to reduce my maximum loss exposure, is it better to tie a stop-loss to the market price of the options or the underlying stock? Managed stops can be a good tool as they act as an extra layer of portfolio protection beyond our initial and known risk assumption if we're dealing with a limited risk strategy. The question of exiting with a tighter managed loss based on the underlying share price versus the prevailing option market isn't as clear-cut. This is largely up to the individual trader and his or her risk acceptance, a...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...A CaLL on VoLatiLitY I'm new to options and having some difficulty. Despite the broader market having more or less trended higher since September 2010, I've found my purchased calls, which I make sure aren't expensive in their relative historical and implied pricing, are nonetheless resulting in net losses. Any insight into what I might be doing wrong would be appreciated. First of all, I'm pleased to see you're learning about the mechanics of option pricing with regards to the influences of volatility. The bad news is when you're buying an option cheap with no other hedge, t...
Explore Your Options
ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions....
Explore Your Options
ARTICLE SYNOPSIS ...I've noticed some bull call spreads trade for less than intrinsic value prior to expiration. Why is that, since it would seem like a good opportunity to buy at a discount compared to an outright call? What you're seeing is a function of larger extrinsic or time value in the short, higher strike call compared to the deeper long call. This causes some verticals, in particular those with one strike deep-in-the-money and the other slightly in- or out-of-themoney, appear to be trading at a discount to its intrinsic worth at expiration....
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Can I adjust a profitable long butterfly prior to expiration and if so, how? Would it amount to being a smart approach for this type of spread?...
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile PORTFOLIO PROTECTION I have a longer-term portfolio of stocks that I'd like to protect against any repeat performances of 2008 into March 2009. How can this be done with options? That's a good question, but the answer doesn't lend itself to one size fits all. Depending on how many stocks are in your portfolio, call and put liquidity within those individual issues, your risk and reward preferences, and how much time you're willing to allocate to managing positions will lead to very different courses of action in the option market. An investor with long-...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile GAMMA SCALPING A VERTICAL? What do you think about hedging directional risk of a vertical spread with stock? That's an interesting question, but one without a "one size fits all" answer. Hedging delta risk and possibly taking advantage of this position type's potential long gamma rests with the trader's objective, risk tolerance, and whether he or she maintains account restrictions regarding this type of hedge and net positioning. When a trader has some type of vertical on, the position is already hedged to a large extent by the other short or long co...
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile I've often heard traders and analysts make statements along the lines of such and such move is being priced into a stock in front of a key event with regards to its options. What is this and how is it calculated? Great question, but it's not a "one size fits all" situation. What's being expressed is how option traders' collective actions can be fitted into a price estimate for the movement expected in the shares once the event driving the option premiums is announced. For instance, in front of Food and Drug Administration (Fda announcements, a typical s...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile ""SPLITTING"" HEADACHE Can you please explain how a 3-for-2 stock split affects the pricing of options? I saw a split of this type and couldn't get my head around the math. Great question. Before we jump into this complicated kind of split, though, let's begin with the typical 2-for-1 so readers not familiar with the basic mechanics can get up to speed. The 2-for-1 split involves adjusting the old strike price and presplit option premium in half. Also critical, the amount of contracts held long or short will be doubled. This adjustment process allows t...
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile RSVP FOR A CHEAPER STRADDLE? I like the idea of positioning with long straddles, but when it comes to pulling the trigger, I'm having problems executing. More often than not, the spreads that look the most attractive overwhelm me with the actual cost to initiate the strategy and/or the associated time decay. Can you offer any insight that might help me get over this barrier to entry? That's a very good question to a situation many investors battle with in developing a trading plan. Your central dilemma seems to involve time and its impact on both shorter-...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile TRADING PLAN I bought five Xyz October 160?170 call spreads for $1.79. Here's my trading plan: Buy Xyz October 160?170 calls spread for $1.79 Max loss: $1.79 Max risk: $1.79 Max reward: $8.29 Ratio: 4.6 to 1 Stop-loss: If Xyz stock closes below $131 Profit stop: Exit three contracts @ tech stop $155 ($3.46 net credit exit) and let the other two contracts run. Time stop: 30 days to expiration Xyz as of today's close: $152 Current value of spread: $3.00 What else should I build into my trading plans? This is when it gets difficult for me: When I'm winning ...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile MEchanics of a Dividend Play In early August, Intel (Intc) saw huge contract volume in a handful of deep in-the-money calls. The largest activity occurred in the August 16 and 17 calls with more than 200,000 contracts trading on each strike. The heavy trading happened in front of shares going ex-dividend. With the value of the August 16/17 vertical being maxed out -- that is, trading at $1.00 -- can you tell me what was going on that day? What you saw were traders attempting to capture the dividend. By buying and/or selling a deep vertical and exercising his...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile SHORT STOCK RISK IN CALL CALENDAR Sears Holding (Shld) was brought to my attention after Barron's profiled the shares as being overvalued. Looking at the premiums, I noticed a distinct skew between the calls and puts. On the surface, the pricing makes the call calendar appear artificially cheap versus its put counterpart. I'm skeptical, but I'm having problems figuring out if some other factor is at work. Can you help? Great question and a hat tip for seeing potential trouble rather than establishing a position that could be riskier than it appears. I ch...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile COLLAR CONFUSION I read some messages from other traders about collars and I'm confused. My understanding is these were a bearish strategy, but above all they're for insurance on your stock. What I don't understand is many forum contributors advise that collars are a bullish strategy! Sure, I want my stock to go up ... but if I've already got stock, then taking out a collar seems impossible to make money in a bullish market (over and above a gain in stock price). If my puts keep expiring worthless, and I have to keep buying my calls back at a higher price ...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile TO CLOSE OR NOT TO CLOSE I have a put credit spread on a stock where the sold leg is out-of-the-money and the bought leg is deep in-the-money. I have already bought back the sold leg and the bought leg is left to be exercised. Should I let the buy leg be exercised and reap the profit or should I close it out before expiration? If you have a put credit spread, the trade was entered by selling a put and also buying a put with a lower strike price. Basically, selling the put credit spread is the same as selling a put, but another put with a lower strike is p...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile VOLATILITY RISK A stock I like has been trending higher, and I was considering a credit spread expiring in May. However, the earnings report is due May 7 and I can't determine whether this volatility rush will negatively affect my position... any advice for me? You are correct, knowing the earnings reporting date when trading individual stocks can be very important. In addition, there is often a volatility rush ahead of earnings. In other words, the implied volatility (IV) of the options will begin to move higher prior to the earnings release. Why? The ...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile VIEWS ON VOLATILITY Is it important to look at the volatility chart of an option that you would like to buy or sell? And if you are trying to determine whether volatility is high or low before you buy an option? Option traders use different tools to measure volatility. Some option analysis software allows traders to plot historical volatility (HV) and implied volatility (IV). Both are helpful when looking at possible trading opportunities. Historical volatility, for example, tells us how a stock (index, futures, exchange traded fund, and so on) has been...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile PUTS DON'T MAKE MONEY WHEN STOCK FALLS I am trying to understand why I did not make any money on a put option. I am hoping you can shed some light. On October 23, 2008, I bought an Xyz put option with the 15 strike price. I bought two contracts at $2.10, or $420 total. The stock dropped to near the strike price. I sold on November 11 for $1.95 and collected $390. I lost $30 even though the stock dropped the way I thought it would. How can this happen? In order to answer your question, it is important that you understand that several factors will influence...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile BUY-WRITES? A report in Baron's said now was a good time for ""buy-writes"" and said the trade was buying stock and selling calls. This sounds like covered calls. Is there a difference and, if not, do you think it IS a good time? You are correct, the buy-write and the covered call are the same strategy. ""Buy-write"" refers to the fact that the trade involves buying shares and writing calls....
Explore Your Options
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile DEBIT AND CREDIT What's the difference between a debit spread and a credit spread? When investors buy or sell options, the transaction is either a debit or a credit. Of course, since an option contract is an agreement between two parties, each trade is for a debit to one party, but a credit to the other. Nevertheless, if I buy October 800 puts on the Standard & Poor's 500 (Spx) for $3.50 per contract, I pay $3.50 per contract and that amount is a debit to my brokerage account. If Spx falls below 800 and I then sell the put for $10, I receive a credit in ...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile LEAPING INTO CALENDAR SPREADS? I see some Leap options are not that expensive given the amount of time they've got -- about two years. There are 23 months you can sell against it. That's got to be a good trade. Where am I wrong? I know there must be things that I haven't properly thought through. For example, I'm looking at a calendar spread with 2011 leaps. The far month (January 2011) costs me about $4 to enter, and the near month (February 2009) brings in about 70 cents. Is this a bad idea? What are potential pitfalls? Long-term Equity Anticipation Se...
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile CRUDE AWAKENING Crude oil keeps moving to record highs, but I don't think it can stay above $100 a barrel for much longer. However, I don't trade commodities or futures. Do I have any other options if I think crude is going to fall during the second half of the year? If you don't want to trade futures, you can play crude oil in a few different ways -- directly and indirectly through your brokerage account. Indirectly, you can often profit from moves in oil through options on energy-related companies like Exxon Mobil (XOM) or Halliburton (HAL). Since the pr...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile SIZING UP A STRADDLE BUY I was looking at a particular stock for a possible straddle. The company is expected to release earnings in 10 days. Suppose I intend to purchase options that have 50 days left until expiration. According to my calculations, the straddle can be initiated for a debit of $400 ($2.00 for the put and $2.00 for the call), which is also my maximum risk. If I intend to hold this trade for only 10 days, would 5% of my account size be a prudent amount to risk? For example, if my account size is $10,000, I can only do one contract straddle i...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile FIGHTING INFLATION Commodity prices are surging. With the Federal Reserve lowering rates aggressively, I am now more worried than ever about the risk of inflation. Is there a way to trade inflation directly, like an inflation index? Interesting question. I don't know of any index that has been created to trade inflation directly. Indirectly, gold has historically served as a good hedge against the risk of inflation. During times of inflation, gold prices tend to rise, and during periods of falling prices or deflation, gold prices tend to fall. If you don...
Explore Your Options by Tom Gentile
Stocks & Commodities V. 26:1 (51) Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile DOLLAR BOUNCE The US dollar has performed miserably against the euro in recent years. I think it's overdone, but I have heard that some analysts say the euro could move all the way up to 1.50. If so, I think the dollar will bounce from there. What strategies can I use? I have heard of shorting gold. Does that make sense? The dollar has really suffered serious losses against the euro in recent years. From November 2006 to November 2007, the euro rose from less than 1.20 to its current levels near 1.47. Seven years ago, one euro could only buy 0.82 dollars!...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile SEASONALITY I know seasonality is an important factor in the commodities markets. Is there any way to play seasonality in the stock market? Can you give an example? Important seasonal patterns exist, not just in the commodities market, but in the stock market as well. One seasonal trend that you might have seen in the commodities market is natural gas. Prices move higher before the winter because colder weather creates an increase in demand for the commodity. As temperatures drop, consumers need more heat and also more natural gas. In the stock market, t...
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile THE COLLAR VS. THE BULL CALL SPREAD I know that owning shares of stock and a put option are equivalent to simply holding a call option. If so, then the collar should represent the equivalent of the bull call spread. Since collars require so much more capital, why do many investors prefer the collar over the bull call spread? Wouldn't it be better to use a bull call spread and then get the interest from a money market account? Great question. You are absolutely correct that buying shares and a put is the synthetic equivalent of owning a long call. If you b...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile FOCUSED ON THE FINANCIALS The recent problems at the brokerage firms has me concerned about wider credit problems. Is there a way to protect my portfolio from future volatility in the banks and brokerage sector? Good question. Volatility in the financial sector is at its highest levels in years because of worries about hedge fund and credit problems. The trend has had an important impact on overall levels of volatility in the stock market because the financials are the largest sector within the Standard & Poor's 500. As a result, the financial sector will ...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile UNDERSTANDING OPTION SYMBOLS I know stock symbols usually have threeor four-letter symbols. Why do options have five-letter symbols? Stocks can have one-, two-, three-, four-, or even five-letter symbols. For example, the symbol for Citigroup is C, for Coca Cola it is KO, and International Business Machines is IBM. Option symbols consist of three pieces of information and have between three and five symbols. The first part is the option root symbol, which is often the same as the ticker for the stock. The root symbol for Citigroup is C. In the case of a f...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile NOT GETTING FILLED I live in Europe and I often place my orders outside of US market hours. I almost always use limit orders between the bid and ask. For example, I tried to buy a call option the other day, but I did not get filled because the stock opened almost $2 higher than the previous day. I know this is all part of the game, but it's frustrating to watch a potential trade go up by about 40% in two days and missing out because I didn't get filled. Is there anything I can do? Some of your orders are not getting filled for two very important reasons. ...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 25:5 (61): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. STRADDLES AND STRANGLES I've been looking at some straddles and strangles on stocks that I think will see an...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 25:3 (49): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. EARLY ASSIGNMENT ON CREDIT SPREADS After a credit spread on equities is executed, is there a risk of early a...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 25:6 (35): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. DOES VOLATILITY MATTER FOR SHORT-TERM TRADES? I trade call options on a short-term basis. I typically hold p...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile OPTIONS AND SHORT-TERM PRICE MOVES I've been working on a system that works well in predicting the moves in the Dow Jones Industrial Average (DJIA) over one to two weeks. It is a purely technical system. I have been using the Dow Jones diamonds (DIA) exchange traded fund (ETF) as a vehicle for the system. What other "options" do I have? -- Mike In addition to the DIA, you can also trade options on the DIA, index options on the DJIA, or Dow futures. The futures will require a separate trading account because futures and options on futures are regulated diff...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 25:1 (65): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. EXPIRATION QUESTION What happens if I hold my put option until expiration and forget to close it out? Is the...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 25:2 (38): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. PUTS AFTER BANKRUPTCY I own January 2009 puts in a company I feel will be bankrupt in the near future. I hav...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile CALENDAR SPREAD QUESTIONS I have developed some indicators that give a fairly accurate picture of when a trend is over. In other words, when signal comes, I'm about 70% sure that the trend will either reverse or go flat. A calendar spread seems like a good tool for trading this kind of opportunity. I know what to do if the market goes against me and the trend resumes and know what to do if the market goes more or less flat. My question is about what to do if the market reverses enthusiastically and overruns the spread. Let's say stock QRS has been declin...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile SELLING TO BUY I've heard the term "selling to buy" when discussing put options. I am not sure what it means and when to apply it in my trading. If you are selling to buy, you are selling or writing options and are willing to buy the underlying security. The most common way of doing this is to sell puts on stocks you want to own. For example, if I want to buy a stock for $50 a share and the stock is currently trading at $50.50, I can sell put options with a strike price of 50. Depending on how much time is left until expiration, I might get a few hundred ...
Explore Your Options by Tom Gentile
Playing The Index Market by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:9 (68-71): Playing The Index Market by Tom Gentile Sometimes, it helps to look beyond the market averages and at specific sectors or industry groups instead. Quiet and trendless markets often leave index traders sidelined. Without volatility, trading indexes become more challenging because often-used strategies like bull call spreads or straddles simply don't work. These types of strategies require vertical movement. Unfortunately, falling volatility and sideways trading have become more frequent in the current market environment. Fortunately, ways to generate prof...
Expore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:9 (40): Expore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. BOX SPREAD Q: I know how to construct a box spread, but why does it work? Is there a way to tell which option...
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:11 (62): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. ONE CALL, THAT'S ALL I bought my first call option on a stock and the trade is working out nicely. The stoc...
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:3 (41): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicatedmto teaching investors how to minimize their risk while maximizing profits usingmoptions. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. IMPACT OF DIVIDENDS ON BEAR CALL SPREAD If I place a bear call spread and the company announces a dividend p...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:6 (73): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. MAX PROFIT ON A BEAR PUT SPREAD Q: On March 30, I entered a bear put spread on XYZ using January 2007 leap o...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:7 (32): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. TRAILING STOP Q: Can you explain what a trailing stop is? A: To do that, first, I have to explain what a st...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:1 (63): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. ASSIGNMENT ON CALENDAR SPREADS I was wondering if there is any possibility that an in-the-money short side o...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:2 (71): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. DELTA & VOLATILITY IN COLLAR TRADES I am a subscriber to S&C, and have traded stocks for several years. Howe...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:12 (57): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. RISK OF BUYING CALLS I've recently watched the behavior of call options of some growth stocks during their ...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:8 (43): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. BEST WAY TO PLAY GOLD I'm looking for ways to play gold with options, but have not found any. Are there any ...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:4 (37): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. OPTIONS ON SINGLE STOCK FUTURES Do you know of a broker that allows trading in single-stock futures and opti...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:9 (34): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. COLLAR QUESTION Q: I need help understanding collars. I know you sell the call to finance the put, and the p...
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:11 (86): Explore Your Options by Tom Gentile AVOIDING ASSIGNMENT Suppose I use a spread by selling a 50 call and buying a 55 call. If the stock starts approaching 50, at what price should I buy back the 50 call to avoid assignment? How else can I hedge this situation for limited losses? Assignment happens when you have very little or no time value remaining in the options contract. Time value will drop toward zero when an option is inthe- money and running out of time. Very deep in-the-money options also have very little time value. In rare instances, an out-of-t...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:5 (47): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. WHAT TO DO WHEN ASSIGNED Q: If I hold a stock in my portfolio and I sell calls on the stock, what do I do if...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:3 (45): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. TIME TO GO? Q: Tom, I've heard you saying, "When volatility is high, it's time to buy, but when it's low, it...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:6 (51): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. CLOSING OUT A LOSING BEAR PUT SPREAD I set up a losing bear put spread, and the price is staying above the p...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:7 (79): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. LEAPS QUESTION Q: I know that there is a point in time when LEAPS turn into short-term options and change th...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:1 (73): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. WHAT WENT WRONG? I am wondering if someone can please explain what happened during this paper trade: Sell tw...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:2 (86): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. DAYTRADING OPTIONS Q: What is the best strategy for short-term daytrading? A: In my opinion, options are no...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:12 (42): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. OPTIONS AFTER BANKRUPTCY How does the bankruptcy of a company affect its options contract? Do all the optio...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:8 (43): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. S&P 500 INDEX OPTIONS SETTLEMENT Are Standard & Poor's 500 ($SPX) options settled American-style or European...
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...V. 22:9 (76): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. SPLIT STRIKE CONVERSION Q: I am interested in information on implementing a split strike conversion strategy to hedge/stabilize a...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:10 (56): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. INTEREST RATE INDEXES The five-year note index (FVX), the 10-year note index (TNX), and the 30-year bond in...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:11 (101): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. OPTIONS THAT EXPIRE WORTHLESS Q: What percentage of calls that are sold on underlying stocks expire worthl...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile COVERED CALLS If I write a covered call for a stock I bought at 30.50, am I allowed to place a stop-loss price, say, 27.00, to protect it from further decline? What happens if the stop-loss price is triggered? Although one of the components of a covered call is the underlying stock, it is still a spread, since it contains a combination of both a long and a short position. Most brokers do not place stop orders on spreads. However, you can probably place what is known as a contingency order, in which the spread is sold based on the stock price alone. If, fo...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...TECHNICAL OR FUNDAMENTAL? Q: Which is a better form of analysis to use when trading options, technical or fundamental? A: Talk about a loaded question! Well, when trading options, the fact is that the life of an option is limited to the terms of the contract. Since the majority of options traders focus on contracts that expire within three months, it's plain to see that fundamental analysis really isn't going to help much. That's not to say that certain fundamentals won't be helpful in making a decision to place a trade, but you probably don't care whether that offshore drilling company is ...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...V. 22:6 (89): Explore Your Options by Tom Gentile STRADDLES How do straddles make money? If the call moves up, doesn't the put lose just as much? Straddles are a "delta-neutral" strategy. Since straddles are composed of both an at-the-money put and call, the deltas start at zero; hence the term. (Delta is the rate of change in the value of the option for each $1 move in the underlying stock.) If the stock were to move higher, the calls would appreciate and profit, while the puts would depreciate. This works the same way if the stock moves down, but vice versa. This is where the confusion se...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile BUYING VS. SELLING What's the difference between buying an option and selling one? Buyers of options have rights, and sellers have obligations. The buyer of a call has the right to buy the underlying security at an agreed-upon price (the strike price). The seller of the very same call has the obligation to the buyer to deliver shares of the underlying security if the buyer decides to exercise his rights. The same is true of puts, but in reverse. The buyer of a put has the right to sell a stock at an agreed price (called the strike price). The seller of tha...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile EUROPEAN VERSUS AMERICAN At the end of your November 2003 column, you referred to the Europeanstyle settlement, saying that you could sell options without the risk of unexpected early assignment. Could you please explain what you meant by this? --D. Streich There are two types of settlement with options: European style and American style. European options cannot be exercised on any date prior to expiration, though they can be bought and sold at any time. American-style options can be exercised at any time prior to expiration....
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:12 (74): Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. EXIT STRATEGY EXAMPLE Would you explain the process of exit strategies? Thanks -- Elom The appropriate exit...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile DIVIDENDS AND OPTIONS PRICES How does a company's dividend affect the option price? -- Newman The dividend can be an important influence on a stock option's price. Obviously, if the company pays no dividend, it makes no difference. However, all else being equal, a dividend will lower the value of a call option and make a put option more expensive. Why? Because after the dividend is paid, the share price will fall to reflect the dividend payment. Further, the fact that the stock falls after the dividend is paid makes calls less valuable and puts more expens...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (65): Explore Your Options by Tom Gentile CALENDAR SPREADS Q: I'm having a hard time understanding exactly how a calendar spread creates profit. Can you explain this technique in language that I can easily understand? A: A calendar spread, also referred to as a time spread, is a "delta-neutral" (nearly risk-free) strategy. It is composed of both a long and a short position (hence the spread), using two calls or two puts that have the same strike price but expire on different dates. Ideally, in order to maximize the profit, you would like for the stock to finish ...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile RATIO BACKSPREAD Could you please explain what a ratio backspread is? --David BJ A ratio backspread is a delta-neutral strategy that is directional in nature, and allows the trader to enter the position with a zero debit or credit (margin is required). The trade is designed to profit from a large move in the underlying but lose little or nothing should the underlying move in the opposite of the intended direction. Generally, the trade is set up when the implied volatility of the underlying options is low, and more options are purchased than sold. The idea ...
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile VOLATILITY How do I figure out which strategies are best to implement when the volatility of the market changes so drastically from one season to the next? Fortunately for option traders, volatility is your friend, provided you understand just what strategies to use. Though the duration of each trend can be difficult to predict, periods of high or low volatility can be assessed by looking at a chart of the VIX (the volatility index from the Chicago Board Options Exchange) at any given time on most charting programs. The VIX has traded in an average range ...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile STOCK OPTIONS AND SPLITS I was wondering what happens to stock options when the underlying stock splits. Does the call's strike price go down? An example would really help me out -- James Kramer When the underlying issue splits, so do the options. For example, if you own a January 50 call on stock XYZ when the stock splits 2-for-1, you will own two January 25 calls post-split. Sometimes, stocks will have a fractional split, such as a 3-for-2, in which case you will own three options for every two you owned prior to the split. A word of caution when trading...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile OPTIONS SYMBOLS What do the various letters signify in an options symbol? -- Name Withheld The letters in an option symbol designate the underlying instrument, whether it is a put or call, the expiration date, and the strike of the contract. MSQAJ is a typical symbol. It would be broken down like this: MSQ (Microsoft Corp.), A (January call), J (50 strike). Every option symbol has a root symbol one to three letters long for the underlying issue. Generally, the root symbol is the same as the stock symbol, unless the stock symbol is four or more letters. In ...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile CREDIT AND DEBIT SPREADS What are some money management tips for credit and debit spreads? Specifically, when should I get out if a spread goes against me? --Bob Great question. By purchasing or selling spreads, you've minimized the risks of stock ownership while maintaining a greater potential return on investment. However, just because you have taken the measure to place a spread trade doesn't mean you should just "set it and forget it." So when exactly is the best time to get out of a spread? Since you asked for both a debit and credit spread, it requir...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile VOLATILITY What exactly is volatility and how is it used to trade options? -- S.L. Volatility is simply the rate of change in a stock, index, or futures contract over a specific period of time. There are two types that we are concerned with when trading options: historical and implied. When speaking of the movement of the stock as it has occurred in the past, we're referring to historical volatility. After using a fairly complex formula to calculate historical volatility, we can use the result to "guesstimate" where a stock should end up over the same peri...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile COVERED CALL STRATEGIES With the market at yearly lows and the volatility of most options at yearly highs, I think covered calls would make a great strategy. I know you don't like to do them because of the high risk, but with stocks down some 90% from their 2000 highs, the risks are definitely less than before. What do you think?-- Rick F. I can't disagree with you. Hindsight tells us any bullish strategy now is going to have less risk than it did two years ago. First, I'll describe covered calls for the folks out there who don't know what they are. Then I...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile OPTION SPREADS I was told that to lower my risk in buying calls or puts, I could spread them. What does this mean? To spread an option means to buy a call or put and sell one simultaneously to hedge it, either in the same month (as with vertical spreads) or different months (diagonal spreads). As an option purchaser, a trader has the right to buy or sell the underlying instrument at a specific price in the future, depending on whether it's a call or a put. Should the buyer decide to exercise the option before expiration, the seller is obliged to deliver, ...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile AULD LANG VIX What happened to the "old" VIX? Can I still use that index to measure volatility? Absolutely. The old VIX (the CBOE's market volatility index) used a series of options from the Standard & Poor's 100 index as a gauge of market volatility. Today, the symbol for the volatility index on the S&P 100 is $VXO, but I recommend adopting the "new" VIX ($VIX) as your primary market volatility indicator....
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile FLEX OPTIONS What are FLEX options?--A.M. Flexible exchange (FLEX) options are totally customizable equity and index options that you can create under certain requirements. They allow traders complete flexibility to create option contracts at unorthodox strikes, expiration dates, and styles (American or European). These kinds of contracts have a minimum trade size of 250, so generally the small trader isn't partaking in the advantages these instruments offer....
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile BUTTERFLY SPREADS Would you be so kind to explain what exactly a butterfly spread is? Thanks -- Simon A butterfly spread is a sideways market strategy using all calls or puts, and is designed to profit from a stock trading in a specific range. They are often cheap to place, offer high rewards, and can be profitable within a few days to a few weeks; so they are ideal for shorterterm swing traders. The construction of the spread generally involves selling (shorting) two contracts in the middle of a stock range (the body) and buying two contracts (the wings) ...
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile CALENDAR STRATEGY How dependent is a calendar strategy on sideways movement? A sideways-moving market is important, but not as important as the volatility of the options that are being used to create the calendar spread. The best calendar spreads I have seen in the markets have two important traits: 1. The options volatility of the month sold is higher than the month bought. This is referred to as volatility skew. Since volatility is the mean reverting, these usually come back together. . ....
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile VOLATILITY INDEX Tom, I have heard of using the volatility index (VIX) as a way of predicting overall market movement. Can you explain this to me, along with some ideas on how to trade the VIX in the markets? -- Fred M. The VIX is a measure of nervousness among traders. The VIX is a chartable indicator, and when it drops to 20% or lower, it means that the markets are calm and have a positive outlook for the future....
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. E-mail your questions for Gentile to Editor@Traders.com, with the subject line directed to "Tom Gentile Question." OPTIONS INFO I am new to options, although I have been trading stocks for several years. Does the technical analysis I use for stocks also apply to options? Is there anything (such as the parameters of ...
Explore Your Options by Tom Gentile
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile DOUBLING DOWN ON OPTIONS Does doubling down on a losing options position by purchasing more and thus lowering the breakeven point work the same as it does with stocks? Thank you. -- Fiorenzo Primavori, Genoa, Italy Yes and no. As a way of dollar cost averaging, yes, this does work. If you decide to buy IBM 70 calls for 7 points and then the stock breaks down, you could purchase an equal number of call options for a lower premium, thus bringing your breakeven down closer to today's price. ...continuded...
Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile COVERED CALLS FOR PROTECTION I am concerned about the markets going forward and want to know if there is any way of protecting my stock portfolio using options instead of liquidating my position. I have heard of covered calls -- do they work as a good protection strategy? Yes, you can protect your portfolio of stocks by using options. The first way a trader can help protect a stock from falling hard is to sell option premium against the shares. This is known as covering your stock position, or a covered call. In a covered call trade, you are buying the und...
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