New Option Trader

A collar provides maximum downside protection at a reasonable price because the premium received from the sale of the call will partially offset the cost of the purchase of the put. – Options University

The chat is about to begin, I’ll post my notes but these things move pretty fast so I’m not always able to get everything. I’m also just posting things that I think are significant, so I recommend if you want more detail listen/watch it on the chat archive at the Think or Swim site.  They [...]

Candestick patterns should be considered in conjunction with the preceding trend.  For instance, a Bullish Engulfing pattern is significant AFTER a downtrend.  A Bearish Engulfing pattern is significant AFTER and uptrend.  In other words, these are not significant following a sideways movement. Bullish Candlestick Notes: Dojis mean the stock is neutral — they’re not a [...]

A few things to remember when doing Bull Spreads. This helped me a lot in keeping straight what this type of trade is doing and why… The leg to focus on is the position with the more valuable leg. The short position is in effect a hedge!  Having this hedge reduces the cost and risk [...]

I am a devoted Think or Swim chat attendee.  It’s one of the things I love about this broker. Dan Sheridan is a guest speaker today and the topic is, “Spread Criteria for Complex Option Trades and Position Management” Will post notes during the chat.. Won’t be comprehensive just anything that really stands out. If [...]

Hedge Reducing the risk of loss by taking a position through options or futures opposite to the current position they hold in the market.