What is the Black Scholes pricing model for? This is a very simple question that deserves a simple answer. The Black Scholes pricing model is an equation that expresses the price of a European call or put option in terms… Continue Reading
When you start trading or investing with stock options, very quickly you will find that understanding the implications of the stock option’s delta is key. Delta is key to getting the leverage, risk-reward, and protection in the underlying stock or… Continue Reading
What is the stock replacement strategy? The stock replacement strategy involves taking long positions in deep-in-the-money call options in stock that you would otherwise own. It works best with stocks that you want to hold for the intermediate to long-term,… Continue Reading
This article, bear put spreads explained, does just that. We’ll take a look at some examples of bear put spreads, understand how they work, the risks and rewards, and under what kinds of circumstances they work the best. A bear… Continue Reading
In this article we look at some bull call spread examples as a way to understand how the bull call spread works and what are the best circumstances for using them. This article explains some basic concepts of how to… Continue Reading
Understanding implied volatility of options is something all options investors and traders will need. Volatility is an important measure for options traders because it is the volatility that gives opportunities for profit. When you are looking to open an options position,… Continue Reading
In an earlier article, we looked at selling covered call options. In this article, we will be looking at how to sell naked calls. Selling naked call options means selling someone else, a buyer the right to buy from you… Continue Reading
Welcome to selling covered calls explained. Of all the options strategies an investor and trader can use, selling or writing covered calls probably carries the lowest risk. At the same time, selling covered calls is a straightforward way to use… Continue Reading
Sometimes, in discussions about investing with friends and acquaintances, I am stunned at how so many people have strange and negative attitudes towards stock options. To try and rehabilitate options from the bad rap they have been getting, here is… Continue Reading