Option pricing is affected by a number of well known variables. Once you have an option position in place, whether it includes calls or puts, that you bought or sold, there are only a few things that can affect the price. 1. Stock Price This relationship is the simplest concept […]

In the book Outliers: The Story of Success, by Malcolm Gladwell there is a chapter devoted to the 10,000 Hour Rule. The short message is: “… that ten thousand hours of practice is required to achieve the level of mastery associated with being a world-class expert – in anything.” Gladwell […]

Recently I received an email form one of our students. He had been reading James Bittman’s book “Trading Options As A Professional” (available through the OptionsAnimal bookstore:http://astore.amazon.com/option0e-20 ). The table in question is posted below for your review: The point that Mr. Bittman makes is that OTM options with two […]

Who remembers that tune by Dire Straits in 1985? I didn’t know how to create “money for nothing” in 1985, but now I do! Before I learned how to trade OPTIONS AROUND A CORE POSITION, I simply bought and held stock. Unfortunately, I didn’t know when to close those positions. […]

On May 10th I blogged about how my stock position in MON could be in trouble. I had purchased some MON stock for about $66-$67 per share and as of yesterday MON was trading as low as $48 per share. If I had NOT used options to manage risk in […]

A student contacted me this past week with a problem. He had entered long calls on HELE on a purely directional play back in April. He bought HELE Aug 30 LC @ 1.60 that were worth only 0.40 when he contacted me. His big question to me was, “How do […]

It was an interesting week for the markets. Earnings, though light, continued to impress and the US economic numbers were still mostly reflective of a recovering economy. China scared the markets early in the week and then reassured the markets early Thursday morning which sparked a big rally. Europe was […]

In case you missed it, last week was a victory for the bears… A lopsided victory. However, on Friday, late in the afternoon, the bulls came out strong and mounted an impressive bit if buying pressure. So the question is, is this something that should be considered for the longer […]

You may have seen this headline on CNBC yesterday… “Stock to tumble another 20%, Cash the safest place: Roubini” Is that what you should really do? I was disturbed to read this headline because if people do go to cash, the market will tumble a lot. If everyone goes to […]

Strange days indeed due to flash crash. We are most definitely in a bearish trend. On May 6 we were all shocked by “Flash Crash.” In case you missed it (tongue in cheek) at about 2:30 pm ET the entire market began a precipitous drop. Over the next thirty minutes […]