What is a Short Straddle? A Comprehensive Guide for Option Sellers
A straddle is the most commonly used tool by professional option sellers. It’s the way we say to the market “Hey buddy, I think implied volatility is going to be higher than realized volatility. Pay me if I am right.”. In previous blogs we talked about all of the things you need to know about […]
Mastering Delta Hedging: A Comprehensive Guide for Option Sellers
When we are running option selling strategies, an important part is maintaining a delta-neutral exposure in our positions. We are trying to monetize the difference between implied/ realized volatility, and delta is noise that can get in the way of us doing this successfully. The process of removing our delta exposure is what we call […]
Who Trades Options – The 4 Groups That Are On The Other Side Of Your Trade
Retail traders have a habit of viewing the market as a faceless, monolithic entity they are up against. Like a gambler facing off against a casino. trade. But in reality trading is less like roulette, and more like poker, where you are directly competing against individual players. You see this thing we call a market […]
How to Make Money Selling Options – The Truth About What It Takes To Run A Profitable Portfolio
When it comes to trading there is really only one core reason that we should be doing it. The answer? To make as much money as possible, as quickly as possible. Trading is one of the ways that we as individuals are able to get paid for our views on the world. It’s a way […]
Understanding Implied Volatility vs. Realized Volatility in Options Trading
Option sellers make money because on average the amount of movement that the market thinks a stock will experience in the future is less than what actually happens. This means that the option prices are on average, expensive. In previous articles we covered what volatility is, and now it’s time to frame it into the […]
Implied Volatility Explained: How to Think About Options Like a Professional
This post will dive into one of the most important concepts in options trading. Understanding this concept will change the way you think about options trading (for the better). The concept is called volatility. As an option trader, you are expressing a view on volatility… Some know this and others don’t. Because options expire, we […]
Straddle VS Strangles – Which is Better For Option Sellers?
In this article I am going to help you choose between whether you should trade straddles or strangles for your option selling strategies. We will address some of the misconceptions and boil down to the real deciding factors between the two. Key Takeaways Traders Debate Straddles VS Strangles All The Time When it comes to […]
Expected Value Trading: The Mentality of a Profitable Trader
Whether a professional trades options, stocks, or pokemon cards, the way they think about their strategy doesn’t really change. The core trait that makes them a professional is the lens through which they view the world and their strategy. We call this lens see the world in terms of Expected Value. In this article we are going […]
Understanding Variance Risk Premium – The Reason Option Sellers Make Money
Option selling as a strategy is something that has been around for a long time. The reason we are able to run these strategies is because of the idea that implied volatility tends to overstate realized volatility. This phenomenon is not something new. It’s not some hidden secret. It’s well researched, throroughly documented, and the […]
The Ultimate Earnings Options Strategy – Selling Options Like a Professional
Variance risk premiums often arise around market events that could lead to significant price changes in stocks. Examples include earnings reports, FOMC meetings, and product releases. These events can trigger substantial price movements, offering considerable returns to those providing liquidity to option buyers during these times. One of the most popular event-driven trades among Predicting […]
The Ultimate Option Selling Strategy – A Boring But Profitable Method That Actually Makes Money
In this article I am going to teach you the most effective way to make money as an option seller. Before we dive in though I need to give you a disclaimer. This strategy.. is pretty boring. You are probably not going to brag to your friends about it. You aren’t going to wake up […]
Treat option selling like a business – how professionals think about trading
Manage your emotions. More time on the charts. You got greedy. There are a million and one reasons to blame yourself for your trading strategies not generating the returns you expect (or hope) that they will. Most traders believe this all boils down to some form of emotional control. If you master yourself, you will […]