Understanding Option Greeks – The Key to Professional Option Selling
One of the things that makes options such an attractive asset to trade is that there are so many dimensions to them. They can be used to express almost any view you have. But how do we actually describe these different dimensions? This is where the option greeks come into play. The Greeks represent different […]
How to Read an Options Chain: Key Terms You Need to Know
So you understand a bit about how options work. You get the necessary approvals from your brokerage. You open the option chain on your brokerage.. And have absolutely no idea what you are looking at. When you go to place a trade in the market, you are going to need to navigate the option chain […]
How Professional Option Sellers Think About Trading – The Mentality You Need To Maximize Your Returns
If you have the opportunity to spend time around people who have actually built a career out of trading, whether by working for a firm or starting something of their own you will notice that they all think about trading through a similar lens. If you want to start running your book like a pro, […]
The 3 Types Of Volatility That Impact Option Prices – Market, Event and Non-Event Volatility
Every single ticker experiences volatility. And if you want to be a profitable option seller, it’s crucial to understand the different ways that volatility can present itself. To help you make sense of volatility, we created a conceptual model called the Three Circles of Volatility model, which will help you clearly understand the different types […]
Mastering Option Selling Strategy Development: Creating A Profitable System
If you have read our previous articles about what makes trading profitable and how volatility works, you are pretty much ready to start looking into your first strategy. This article is going to dive into the world of what a profitable strategy looks like and what it would take to actually build one for yourself. […]
What is Gamma in Options Selling – Understanding the Rate of Change in Delta
There’s a saying I like which goes “One man’s theta is another man’s gamma”. I like this a lot because it paints a clear picture of the relationship between how we get paid as option sellers, and what we are getting paid for. Gamma is a really important greek for option sellers to understand. It […]
What is Vega in Options? Understanding Sensitivity to Changes in Implied Volatility
Vega is the option greek that measures an option’s sensitivity to changes in implied volatility. As an option seller, understanding Vega is crucial because it directly impacts your exposure to market uncertainty and can significantly influence your PnL. Key Takeaways What is Vega? Vega represents the amount by which the price of an option changes […]
Volatility Mean Reversion and Clustering – Option Selling Characteristics
Everybody seems to think that volatility is some unpredictable wild horse that bucks and kicks and does whatever it wants. But this is actually untrue. Volatility is something we can measure. It’s something with very distinct characteristics that repeat themselves over time. And after you read this article, you will see exactly what I am […]
What Are Underlying Shares? Option Selling Basics
Options are what we call a derivative product. They are based on another asset. To fully understand what an option is, we need to grasp what it’s based on: the underlying stock. For example, if you are trading options on Apple, the underlying would be Apple’s share price. This is a pretty easy concept to […]
How to Read an Option Chain: Identifying Option Information When Placing A Trade
I recently wrote a blog which broke down options into the Six Key Characteristics that define them. To sum it up, we defined an option as a contract between two people that gives the purchaser the right to buy or sell a stock at a given price within a specified timeframe, and the purchaser pays […]
What is an Option Contract? 6 Characteristics That Every Option Has
This guide explains exactly what an option is and paints a picture of them that you can use to really understand what you are trading. This is really a guide for traders who are completely new to options but that doesn’t mean it isn’t important. The first step on the road to options mastery is […]
The Power of Data Driven Trading: How Profitable Option Traders Succeed
If you read our article about expected value and what separates the top 1% of traders from everyone else, you know that profitable traders think in terms of expected value and have extreme price sensitivity when they look at the markets. But how do they actually have the confidence to put their money behind these […]