It’s generally unwise to use 100% of your account’s buying power for options trading – unless you’re in specific situations where it is okay to lose the entire account. Such situations might be that you have a segregated account that represents only a small fraction of your total savings. Or it could be that you … Read more
The following is a true story. It is not to highlight the unfortunate series of events that occurred to an experienced zero-DTE trader, resulting in a $116,000 loss – a loss that is over three times the defined maximum risk of his original bear call spread. It serves as a reminder that the market is … Read more
Discover how smart bond allocation can enhance your options trading returns while reducing portfolio volatility. Learn modern diversification strategies that work in today’s interest rate environment. Contents The Modern Case For Bonds In Trading Portfolios Many options traders dismiss bonds as “boring” investments that don’t fit their active trading style. This thinking costs them significant … Read more
Contents There are four things that you need to specify when you want to buy or sell an option contract: The underlying asset The type of option: put option or call option The option expiration date, and sometimes time, because some expiration dates have settlement time at the open (AM expiration) and at the close … Read more
In a previous article, we discussed how Edgeful.com can provide an edge to day traders in assets such as stocks, cryptocurrencies, forex, and futures. Today, we continue by discussing how even options traders can utilize Edgeful. Certain option strategies move with the price of the underlying assets. Therefore, if you have an edge in the … Read more
In the options market, there are options sellers and options buyers. What is a win for the option seller is a loss for the option buyer, and vice versa. Contents The option sellers will reap the greatest reward if all the options they sell expire worthless. In that scenario, the buyers’ options would become worthless, … Read more
For anyone new to options investing, the first thing one must learn is money management. When I say “money management,” I don’t mean balancing the checkbook or checking on the account balance. In options investing, money management refers to the strategies and practices used to control risk and keep the account within the safe zone. … Read more
In this article, we are talking about selling put options for income generation rather than for acquiring stock. Contents Investors generate income by collecting premiums for selling put options with a strike price below the current stock price, expecting that the stock will not come down to the strike price before expiration of the option. … Read more
Rolling options is a powerful tool in a trader’s arsenal, allowing for trade adjustments to manage risk, extend duration, or optimize profits. However, many traders make critical errors when rolling options that can turn a good adjustment into a costly mistake. Below are the biggest pitfalls traders encounter when rolling options and how to avoid … Read more
Contents Options trading offers significant profit potential, but taxes can eat into your gains if you don’t understand the rules. The IRS treats options differently based on how they are traded, whether they are held short-term or long-term, and the specific strategy used. For active traders, failing to account for tax implications can lead to … Read more