Understanding Option Greeks and Dividends: Vega
Vega is one of the most important Greeks, but it often doesn’t get the respect it deserves. Vega is the amount a theoretical option’s price will change for a corresponding one-unit (percentage-point) change in the implied volatility of the option contract. Simply stated, Vega is the Greek that follows implied volatility (IV) swings. Don’t forget […]
Trading Options In An IRA
Interested in trading options in your individual retirement account (IRA)? You’ve come to the right place. Credence Global Bank Invest combines a powerful online trading platform with highly rated customer service and easy-to-understand options investing education for beginning and advanced traders alike. If you’re ready to start investing money for your retirement, your first move may be […]
How to Write Covered Calls: 4 Tips for Success
When writing a covered call, you’re selling someone else the right to purchase a stock that you already own, at a specific price, within a specific time frame. Since a single option contract usually represents100 shares, to run this strategy, you must own at least 100 shares for every call contract you plan to sell. […]
Investing in Options: A Beginner’s Guide (Part 1)
Options are a versatile financial instrument for investors. They are also complex and somewhat risky. It's important that you understand the basics of option trading strategy before diving in. What is an option? Options are contracts that give you the right to buy or sell an asset at a fixed price (strike price) for a […]
Tips for Writing Successful Covered Calls (Part 1)
What is a covered call? A covered call is an income-producing strategy where you sell or write call options against shares of stock you already own. Typically, you'll sell one contract for every 100 shares of stock. In exchange for selling the call options, you collect an option premium. But that premium comes with an […]
Investing in Options: A Beginner’s Guide (Part 3)
In the options world, there are two types of volatility: historical and implied. Historical volatility refers to how much the stock price fluctuated (high price to low price each day) over a one-year period. Since it's historical, this figure refers to past price data. If the number of data points is not stated (for example, […]
Tips for Writing Successful Covered Calls (Part 2)
What is assignment? If you sell a covered call, you're accepting an obligation in exchange for the option premium you collect. Your underlying shares of stock might be “called” away from you if the option buyer chooses to exercise. We say “might” here because it's not guaranteed that you'll be asked to honor this obligation. […]
Investing in Options: A Beginner’s Guide (Part 4)
Speaking Greeks For option traders, the Greeks are a series of handy variables that help explain the various factors driving movement in option prices. Although the Greeks collectively indicate how the marketplace expects an option’s price to change, the Greek values are theoretical in nature. There is no guarantee that these forecasts will be correct. […]
Tips for Writing Successful Covered Calls (Part 3)
Tip 2: Don't panic if you're assigned. If you're called upon to deliver stock, it can come as a surprise. Some covered call writers worry about losing a long-held stock position this way. But you have more choices in this situation than you may realize. Let's say you've bought 100 shares of XYZ per year […]
Tips for Writing Successful Covered Calls (Part 4)
Tip 4: Consider buy-writes. If you're attracted to covered calls as an ongoing income strategy, you can buy the stock and sell the call option in a single transaction. This is called a buy-write. Buy-writes offer more than convenience. For one thing, you reduce your market risk by not legging into the strategy. (When you […]
