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The amount of a gift you receive is NOT considered income. The gift may seem as good as a paycheck, but you are not required to pay income tax on the gift. You are not required to pay gift tax, either. If there is a gift tax, it must be paid by the donor (the person who gave the gift). Here is...

Recall that a call price is a function CP(S, X, t, v, r), where S is the current stock price X is the strike price t is the time to expiration v is the volatility assumption r is the interest rate assumption and assumption for the expected growth rate of the underlying Vega is defined to be...

If you already own a stock, especially highly appreciated stock, collars are a good way to protect your gains. You can create collars on individual stocks in your portfolio, or you can create a collar on a broad-based index (i.e. S&P 500) that is highly correlated with your stock portfolio...

Also take a look at the SKEW index. The CBOE SKEW Index is an index derived from the price of S&P 500 tail risk. Similar to VIX, the price of S&P 500 tail risk is calculated from the prices of S&P 500 out-of-the-money options. SKEW typically ranges from 100 to 150. A SKEW value of 100 means...

One possible hedging strategy is to use collars. A collar is a strategy where you buy an OTM put and sell a OTM call on the same underlying. Depending on your strike selection, you can create what is called a "zero-cost" collar, where the cost of the purchased put is offset by the credit...

In addition to the degrees you mentioned above, you may also want to consider financial certifications. For example, the CFA (Chartered Financial Analyst) certification is well recognized in the financial industry. In fact, many fund managers and portfolio managers are CFA charterholders...

You can solve this as a "constrained optimization problem" using Excel Solver. You can setup Excel solver as follows: Objective Function: Maximize probability of hitting target return (12%) By Changing Cells: Portfolio Volatility Under The Following Constraints: 1) Sharpe Ratio = 1.5 2)...

Backtesting is definitely a great start to verifying whether these trading strategies are effective. However, even if the backtest results are impressive, I would start off small and verify how the strategy works in live market conditions, before allocating any significant money to the...

Can you elaborate on the types of calculations you want to perform? Are you trading stocks / futures / options / bonds / currencies / etc...? What criteria do you want to use to size your positions? (max risk, value-at-risk, volatility-adjusted risk, etc?) - <a...

Even if the system is right 80% of the time, you can still lose money using such a system. What's more important is how much you lose when the system is wrong 20% of the time. For example, if you make $10 every time the system is right (80%) and lose $100 every time the system is wrong...

Here is an interesting article from a MIT Finance Professor that may address some of your questions: http://www.mit.edu/~junpan/ddjpb.pdf "This section is a brief review of delta and gamma
based VaR calculation methods for options. As we shall see, as a last resort, one can estimate VaR...

Other possible adjustment strategies include adjusting the ratio's of the short call and / or rolling out to further months. For instance, as the stock approaches the short strike, you could roll the short call using a butterfly spread (buy back the short call, sell 2x further OTM call, and...

Beyond the obvious different in contract sizes between SPY and SPX, there are other differences between SPY and SPX that make direct pricing comparisons imperfect. For instance, SPY is an American-style option, while SPX is a European option. SPY pays dividends, while SPX does NOT...

Based on your description, you have assumed a contract multiplier of 1. So using this 1x multiplier, your total portfolio greeks are as follow: Delta: 1300 Gamma: -2150 Vega: -1500 To neutralize delta and gamma, you could buy the call option to neutralize the gamma and then short stock the...

Can you be more specific on the type of multi-legged spread you are trading and the types of adjustments you want to make? For instance, are you starting off as an iron condor and adjusting by closing out only one side of the iron condor? --- Backtesting Option Strategies

Trading activity in options can have a direct and measurable effect on stock prices, especially on the last trading day before expiration. During expiration, many investors attempt to unwind their futures and options positions before the contracts expire. This activity frequently includes...

Personally, I manage my risks and my P/L based on various SD (standard deviation) moves in the underlying market. Although we all know that markets don't follow a true normal distribution but rather have fat tails (leptokurtic), I find using standard deviation as a useful guideline in making...

Market makers are major players in the gamma-scalping arena. As they take the other side of public trades, they hedge the deltas and subsequently scalp gamma of long option positions. In a way, the gamma scalping of market makers links together implied and historical volatility. For example...

Previously, the Internal Revenue Service announced that it will postpone the effective date for cost-basis reporting for options trading. Instead of taking effect on Jan. 1, 2013, the rules will take effect on Jan. 1, 2014. Hence, your broker may or may not report your 2013 options trading...

To calculate SET, the index was calculated as if each of the 500 stocks in the index were trading at its individual opening price for the day — simultaneously. This is an imaginary number. All stocks do not open at the same time. For instance, if there is buying pressure at the opening...