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Investors need to take responsibility to understand the products that they trade in. There are risk "disclosure documents (link above)and they explain briefly how options are used to attain the leverage in these products. We now have up to 5 years history to look back on to overlay against the...

Ironchef, I started trading options only Long back in 1982 and made money until 1988 when vols exploded after the crash and stayed bid. Then there was almost 20 years where selling premium was more profitable. Since then, books have taught people how to sell premium and make a living and slowly...

I would add to JackRab's insightful comments. The next step is to think about your risk return payoff. What do you expect from the market and what returns would that give you in the time frame your options offer. There needs to be a higher return relative to the risk weighed against your...

When you start looking at deep ITM options, the liquidity dries up and the market makers will take you to the cleaners. The best way to assess their value is to look at the corresponding OTM option which has more volume and tighter spreads and that should give you the extrinsic where they can...

When exercised there are fees and commissions of around 15 dollars to pay in addition to your stock purchase and option sell. The stock is taken and cash deposited in your account. The short option disappears at night and premium remains in account. The costs and taxes take any profit possible...

Yes - High Kurtosis means fat tails. OTM options may be too cheap relative if you think fat tails will happen. Fat tails disrupt all option pricing as risk is undefinable although people try with normal distribution curve. This is the rare time where you want to buy options.

The short answer is they trade like options and below is the long detailed explanation. A trader would use them for a day and not a year if compelled to play. The Bottom Line Leveraged ETFs, like most ETFs, are simple to use but hide considerable complexity. Behind the scenes, fund management...

If you buy the stock at 30.09 and sell an option at 29 strike + 1.35 premium = 30.35. The difference is a profit of .26 cents before commission and exercise costs.

Tasty Trade is based on the assumption that implied volatility is overstated which is false. They actively try to pick up nickles and dimes in front of a steam roller and occasionally lose arms and legs. There are many retail traders that never got away and lost all. The broker TD collects...

Yes - you made $1 dollar in option premium assuming strike price is ATM/Higher or what you bought the 100 shares for. The question is what did you lose in dividends that the other trader earns from your 100 shares of stock in the morning? It probably is more than $1 dollar as he wants to make...

Leveraged ETF's = buying daily short dated option premium with high time decay. You need a big move to be compensated. I would hope you have learned your lesson with small fee in little loss.

When you think about trading leveraged ETF's or ETN's remember there is this drag that impacts its tracking error. They effectively buy options each day to adjust the leveraged vehicle. So when you buy these instruments you are paying for short dated option premium and management fees thus the...

If you sell a call for a dollar, it can be exercised up to 5:30 pm approximately the same day so it doesn't have to happen during trading hours - be careful... If exercised, you will get to keep the $1 dollar premium and the broker will take your 100 shares of stock. If you dont have stock, your...

Some quick thoughts for you, Here's the Premise of the Trade: I have a Bias from my Analysis that stock XYZ is going to make a HUGE move to the upside I want to trade Outright Options on this trades ( long Calls ) So what I'm trying to understand and figure out , is if there's a way to stay...

Yes - but you may find that the weekly options dont have the same strike prices so hard to roll existing positions.

The problem is that the implied vols have come down significantly from the 1980's as books proclaiming that selling premium is the way to make a living have propagated and a huge number of people have used the strategy from their homes and personal devices. There are three main issues which will...