Options 101
06:33:53 PM EDT | 03/05/2010
What Makes a Stock Optionable?
By Linda Piazza | Did you ever run a screen to find an options trade that fit your parameters, only to find that the stock that showed up didn't have options? What makes a stock optionable?

Options 101
05:00:37 PM EDT | 02/26/2010
Gloom and Doom
By Linda Piazza | A CBOE white paper focuses on an option strategy to help protect equity positions against calamitous losses. This article discusses the theory and the accompanying Trader's Corner shows how such a strategy might perform.

Options 101
02:55:48 PM EDT | 02/19/2010
A Weighty Topic
By Linda Piazza | Options with different expiration cycles and at different distances from the current price may react differently to changes in volatility.

Options 101
04:30:46 PM EDT | 02/12/2010
When Fear Runs Rampant
By Linda Piazza | How do traders manage the fear that arises from adverse market conditions?

Options 101
03:03:25 PM EDT | 02/05/2010
An Easy Way to Think about Delta
By Linda Piazza | Whether you're all that interested in the Greeks or not, you're likely interested in a rough-and-ready calculation of how likely your option is to be in the money at expiration. Delta can provide that rough-and-ready estimation.

Options 101
07:21:53 PM EDT | 01/29/2010
Risky Business
By Linda Piazza | Trading options can be risky business. Your first goal as an options trader is to assess the risk you're assuming.

Options 101
05:10:43 PM EDT | 01/22/2010
Theory Doesn't Always Translate into Reality
By Linda Piazza | Many of our online brokerages now have bells and whistles that allow us to estimate when a trade might get into trouble. Don't forget to factor in an easy estimate of how volatility might change those calculations.

Options 101
01:37:13 PM EDT | 01/15/2010
You Don't Have to Take It Any More
By Linda Piazza | While it's impossible to avoid all losses, options are flexible instruments that allow creativity. When faced with an imminent loss, we can and should search for a way to avoid or lessen losses.

Options 101
01:38:36 PM EDT | 01/08/2010
Option Volume and Open Interest
By Linda Piazza | Option volume changes with the day's buying and selling of options, but open interest is updated only once a day, at the end of the day.

Options 101
09:32:49 PM EDT | 01/01/2010
Beware the Ides of December
By Linda Piazza | A few weeks ago, I had taken a fresh look at our earliest archived article, from 1998. That article also included the admonition, "Never hold a position over an earnings report," a wise admonition.

Options 101
06:14:12 PM EDT | 12/25/2009
Get Out Your Calculators
By Linda Piazza | Manually calculating standard deviations on your favorite trading vehicles provides a deeper understanding of how your underlying moves.

Options 101
04:25:45 PM EDT | 12/18/2009
Liquidity Problems in European-Style Options?
By Linda Piazza | One writer proposes that traders of options with European-style settlement might notice liquidity problems in a strong move that is deemed temporary.

Options 101
02:17:30 PM EDT | 12/11/2009
Does Volatility Trend?
By Linda Piazza | Steve Meizinger posed that question in "Market Expectations and the implications on Options Trader," the lead article in the Options Industry Council's Fall 09 newsletter. Since I believe in using standard technical analysis tools to study the volatility indices, the question caught my attention.

Options 101
03:07:24 PM EDT | 12/04/2009
Thursday's Child Has Far to Go
By Linda Piazza | Thursday is a long way away from Monday's opening. Many who sell premium think of that long expanse of time as the weekend nears.

Options 101
06:59:11 PM EDT | 11/27/2009
Option Myths and Odd Facts
By Linda Piazza | It's time to debunk a couple of options myths.

Options 101
03:04:10 PM EDT | 11/20/2009
Managing by the Greeks
By Linda Piazza | I once dreaded having to learn anything to do with the Greeks of options pricing. All the variables were dependent on one another, making the topic more difficult to comprehend. For years, though, I've been taking baby steps toward managing by the Greeks and I invite you to do so, too.

Options 101
02:29:56 PM EDT | 11/13/2009
What's That Profit Based On?
By Linda Piazza | When traders make trading plans, they may include a desire to make 5, 10 or even 15 or 20 percent profits. But what's that profit based on?

Options 101
05:54:16 PM EDT | 11/06/2009
Change Is Coming
By Linda Piazza | Two changes are being rolled out, one which will definitely impact options traders. Hopefully, the other one won't.

Options 101
05:12:14 PM EDT | 10/30/2009
Uncle Sam Wants You, Options Traders!
By Linda Piazza | Everyone had picked up on the controversy over flash trading. Now the SEC wants you to weigh in on the topic.

Options 101
05:31:39 PM EDT | 10/23/2009
Trade Allocations
By Linda Piazza | In this follow-up article to last week's Options 101 article, I employ examples from my own portfolio. I thought last week's general comments might be more practical if viewed against the requirements of an actual portfolio.

Options 101
05:29:04 PM EDT | 10/16/2009
Top Trading Rules for Option Trading, Redux
By Linda Piazza | Back when option prices were still quoted in eighths, a staff write authored an article on the top ten rules for trading options. It's time to look at a couple of those still-relevant rules again.

Options 101
06:09:01 PM EDT | 10/09/2009
Why Is My Bull Call Spread Not Making as Much Money as I Expected?
By Linda Piazza | What predicts how much a certain options strategy will move with a move in the underlying?

Options 101
08:45:17 AM EDT | 10/03/2009
Fashion Revival
By Linda Piazza | A new backtest of the collaring strategy shows it outperforming the underlying index over the last ten years.

Options 101
08:25:12 AM EDT | 09/26/2009
Wanna Bet?
By Linda Piazza | In the option world, a couple of types of options seem more closely linked to the gambling world than others: binary and event options.

Options 101
09:28:04 AM EDT | 09/19/2009
ETF Options and Dividends
By Linda Piazza | Many ETF's offer dividends. However, they sometimes do so in a way that causes maximum angst to option traders.

Options 101
03:01:40 PM EDT | 09/12/2009
When Do Options Trade?
By Linda Piazza | Options on various securities may have different trading hours.

Options 101
02:03:41 PM EDT | 09/04/2009
Three Options on the OEX
By Linda Piazza | Options traders who have an opinion about where the OEX might go have three choices for trading that view: OEX, XEO and OEF options.

Options 101
02:29:34 PM EDT | 08/28/2009
Evaluating Options Strategies
By Linda Piazza | Options are versatile, so that there's often more than one way to capitalize on a move. This article requires some patience, but it evaluates the outcomes of a couple of theoretical strategies, using different option strategies at a time when one has reason to believe options might be expensive.

Options 101
02:25:44 PM EDT | 08/21/2009
Notice Anything Different?
By Linda Piazza | The SEC recently expanded the original one-point strike program. The expansion allows exchanges to price more options, on more expensive securities, at one-point strike intervals.

Options 101
04:42:51 PM EDT | 08/15/2009
Cheap Options, Relatively Speaking
By Linda Piazza | Some traders are always on the hunt for cheap options. Scans can find cheap options but think carefully before buying them. Know the risks.

Options 101
04:09:12 PM EDT | 08/07/2009
In the Market for a Profit
By Linda Piazza | Be aware of the pluses and minuses of placing triggers for spread orders based on the spread's price, especially during amateur hour.

Options 101
07:00:07 AM EDT | 07/31/2009
Portfolio Diversification with VIX Options
By Linda Piazza | Is using VIX call options for diversification a good idea?

Options 101
11:51:40 AM EDT | 07/24/2009
Why You Always Need a Cash Cushion in Your Option Trading Account
By Linda Piazza | A cash cushion ensures that your account isn't wiped out if something unforeseen happens. It also provides you with the money you might need if another tempting trade comes along. But there's another important reason for keeping a cash cushion.

Options 101
00:08:58 PM EDT | 07/17/2009
Negative Gamma Effects in Option Expiration Week
By Linda Piazza | While the topic of this article proves somewhat advanced, it's not necessary to understand every bit of the discussion to capture the main point. If you're not familiar with the Greeks of options pricing, just skim the calculations and read for the important main point.

Options 101
09:34:42 AM EDT | 07/10/2009
Testing, Testing, Testing
By Linda Piazza | Should you back test option strategies? Sure you should. Before you devote too much of your trading portfolio or emotional capital into a back-tested options trade, however, trade the new signal live in small lots only.

Options 101
00:00:07 AM EDT | 07/03/2009
Snapshot Options
By Linda Piazza | A trading friend's question about the merits of a one-lot in-the-money option position versus a three-lot out-of-the-money position prompted this article. Which would be better for creating a position that was short a certain number of deltas? That depends.

Options 101
02:21:22 PM EDT | 06/26/2009
What's the Plan?
By Linda Piazza | What's in a trading plan? Here's a look at a page from my trading book.

Options 101
Saturday, June 20, 2009 3:47:38 PM
Customer Portfolio Margining
By Linda Piazza | In an article for the Options Industry Council's newsletter, Todd Wilemon explains that in Regulation T accounts, margin is computed using a strategy-based calculation. In accounts with customer portfolio margining, Wilemon terms the calculation of margin a risk-based approach that can result in lower margin requirements for the same options trades

Saturday, June 13, 2009
Options 101
"That Which We Call a Rose, by Any Other Name Would Smell as Sweet"
By Linda Piazza | What options traders variously call iron butterflies, low-probability iron condors and high-probability iron condors are by any other name just iron condors.

Saturday, June 06, 2009
Options 101
Full Alert
By Linda Piazza | You're thinking you know all about setting alerts, right? Have you thought about how helpful it can be to tailor them to your style of trading?

Saturday, May 30, 2009
Options 101
Feeling Unsettled by Settlement Values
By Linda Piazza | Settlement values on option-expiration Friday often deliver unpleasant surprises to traders of cash-settled index options.

Saturday, May 23, 2009
Options 101
Earnings and Volatility
By Linda Piazza | Probably the first piece of advice I can remember from my earliest days as an Option Investor subscriber related to holding options over earnings. Whether it was Jim Brown or another member of the staff talking about long option trades, each cautioned that those trades should be closed before earnings.

Saturday, May 16, 2009
Options 101
Order Flow
By Linda Piazza | Does your broker/dealer pay for order flow? Although mine says it doesn't, it routes "all eligible OTC, Option and Listed orders" to its parent broker/dealer for execution, and that broker/dealer may at times receive remuneration for routing customer orders to the "execution venue" it has chosen "on behalf of its customers."

Saturday, May 9, 2009
Options 101
Are OPRA-Designated Options Symbols Disappearing?
By Linda Piazza | I find my brokerage's platform easy to use with one exception: options orders require the trader to input options symbols. If you happen to be dyslectic, in a hurry or just a bad typist, it's easy to transpose two of the letters that comprise an option's symbol and end up with a trade you didn't intend to make.

Sunday, May 3, 2009
Options 101
Offsetting Time Decay
By Linda Piazza | Last week's Options 101 article dealt with volatility and was titled "Volatility on the Brain." . Volatility still seems to be the topic du jour.

Friday, April 24, 2009
Options 101
Volatility on the Brain
By Linda Piazza | Everywhere I look or listen these days, I read or hear questions and comments about volatility. For example, during March, the CBOE's "Ask the Institute" once-a-week posts featured three questions in a row about volatility from options traders.

Friday, April 17, 2009
Options 101
Why Options Traders Should Beware Amateur Hour
By Linda Piazza | During the first few minutes after the open and the last few minutes before the close, bid/ask spreads sometimes widen and options values can be inflated.

Friday, April 10, 2009
Options 101
Between the Bid and the Ask
By Linda Piazza | Many experienced traders vow they'll never put in a market order, always putting in an order between the bid and ask. Is there a time, however, when traders should waive that vow and put in the market order?

Friday, April 3, 2009
Options 101
Exits and Emotions
By Linda Piazza | Who controls when you enter a trade? You do. What controls when you exit? The market does. Therein lies the reason that many traders have more difficulty with exits than entries.

Friday, March 27, 2009
Options 101
The Stock Repair Strategy: Component Option Trades
By Linda Piazza | Wouldn't you like to know about a strategy that could, under certain circumstances, repair a stock loss even if the stock gained only moderately and never regained the level at which you bought it? This Options 101 article will provide background on the options trades that are involved while the companion Trader's Corner article delves into the way they're combined to establish the stock-repair strategy.

Friday, March 20, 2009
Options 101
Deviations from the Norm
By Linda Piazza | This article follows up last week's. It discusses another tool that option traders might use to establish ranges in which they might expect the underlying to travel. Such tools help option traders set stops and profit expectations.

Friday, March 13, 2009
Options 101
Ranges and Deviations
By Linda Piazza | The topics discussed in Options 101 articles usually delve into matters related specifically to options. So why will this article and the next be devoted to the ATR (average true range) indicator and standard deviation calculations?

Friday, March 6, 2009
Options 101
Striking While the Iron Is Hot
By Linda Piazza | Option traders make more decisions and convey more information to their brokers or on their order pages than stock traders do. The relative complexity of the decisions options traders need to make can mean the difference between a winning and losing trade to the unschooled option trader.

Friday, February 27, 2009
Options 101
The Secret Formula for Options
By Linda Piazza | You've probably heard about the Black-Scholes model for calculating option prices, but have you heard about the so-called secret formula that relates stocks, calls and puts?

Friday, February 20, 2009
Options 101
It's That Time Again: Tax Considerations for Options on Broad-Based Indices
By Linda Piazza | It's time to warn again about the special treatment that broad-based index options should receive when you complete tax forms.

Friday, February 13, 2009
Options 101
Interest Rates Matter
By Linda Piazza | When thinking about option prices, interest rates matter.

Friday, February 6, 2009
Options 101
Gravitating Deltas
By Linda Piazza | Delta measures how sensitive an option's price is to price changes in the underlying. However, when volatility changes, that sensitivity alters in different ways for OTM, ITM and ATM options. James Bittman's "fifth rule on deltas" makes it easy to predict that alteration.

Friday, January 30, 2009
Options 101
NBBO: An Acronym to Know
By Linda Piazza | When I enter the option symbols for a spread on my BrokersXpress order page, a "Quotes" box displays the NBBO. What is NBBO, other than a handy tool that keeps clients from having to calculate the bid/ask spread by hand? The answer applies to all options traders.

Friday, January 23, 2009
Options 101
What's in a Name?
By Linda Piazza | If you're venturing away from straight call and put buying into combination trades, you might be trying spreads. If so, you might find it difficult to keep the nomenclature straight. This article presents a visual image that might prove helpful.

Friday, January 16, 2009
Options 101
Missing the Point
By Linda Piazza | Price isn't everything. Market makers or institutions and their computers might care just as much about something else when making buy and sell decisions: volatility.

Friday, January 9, 2009
Options 101
Free Resources for Options Traders
By Linda Piazza | In our current economic climate, people want value for their money. What can be more valuable than free resources?

Friday, January 2, 2009
Options 101
When an Ex Can Cause Problems
By Linda Piazza | Traders who buy or sell options on an equity or ETF that offers dividends should keep track of the ex-dividend date and take appropriate action to protect their option positions.

Options 101 Classics Here

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