Articles tagged with "basics"

Why We Always Have to Use Limit Orders in Options Trading

Why We Always Have to Use Limit Orders in Options Trading

A few weeks ago, we discussed how a stop-loss order works and why they’re so important. While a stop-loss is a key piece to risk management, some investors may not prefer to have a “hard” stop-loss. That is, a stop-loss order that is placed with a broker. Others prefer to monitor the position and, if […]

Adjusting 101 When to and not to adjust an options position

Adjusting 101: When to and Not to Adjust an Options Position

Over the last few weeks, we have been delving into the adjustment portion of trade management. Whether an options trade is working for or against you, there are times where it’s prudent to adjust the position. Put simply, the risk/reward dynamics shift and when that occurs, it may be best to counter by adjusting the […]

Adjusting 101: How to Adjust an Options Leg

Options trading is not a very cut-and-dry scenario. It requires constant monitoring, risk/reward calculating and at times, adjusting. To adjust an options position, sometimes we need to add a leg to our position. In other scenarios it means we need to “roll” the position. Finally, there are times where we simply need to adjust an […]

Adjusting 101: How to Roll an Options Position

In our first Adjusting 101 discussion, we talked about adding legs to an existing options position. Unlike stock trading, options traders have an arsenal of maneuvers they can perform mid-trade. In stock trading, we can buy, sell or do nothing. Aside from adding or subtracting an options leg though, another option is to roll the […]

Why You Should Use the Stop Loss Order

Why You Should Use the Stop Loss Order

Believe it or not, the stop loss order is one of the hardest to execute for traders. Particularly when it comes to new traders. No, it’s not technically any harder to implement than a limit or market order. But mentally, a stop loss can be hard to use because it means losses. This may seem […]

Picking the Perfect Trade: A Trading Guide for Beginners (Part 2)

In our last entry, we introduced the procedure for initiating a new trade. In essence, it boiled down to three things: Decide on a direction, a time frame and a strategy. So for example, let’s say we’re bullish over the next three to four weeks and plan to take advantage of that bias with a […]

Picking the perfect trade a guide for beginners

Picking the Perfect Trade: A Trading Guide for Beginners

The great thing — and daunting thing — about the stock market is its sheer vastness. There is no holy grail; there is no perfect market, sector, industry or stock to trade. It’s full of opportunity, yet full of pitfalls should you lose your way. When it comes to options trading, it simply comes down […]

Stock Market Holiday Schedule for 2017 and 2018

Stock Market Holiday Schedule for 2017 and 2018

Here’s the Stock Market Holiday Schedule for 2017 and 2018 Trading around the stock market holiday schedule can be a tricky endeavor, particularly for options investors. When the market is closed, or has a full-day closure following or a proceeding an early close at 1 p.m. ET, there could essentially be one-half trading session in […]

OTM vs. ITM: What Does “In-The-Money” Mean?

OTM vs. ITM: What Does “In-The-Money” Mean?

Investors that have been getting into options trading have surely seen terminology relating to in-the-money. In fact, there are various “money-ness” terms in the options market. There’s also out-the-money and at-the-money. So what do all of these terms mean? Put simply, the ITM, OTM or ATM term refers to where the option’s strike price is […]

Why Liquidity Is So Important in the Options Market

Why Liquidity Is So Important in the Options Market

Liquidity plays an important role in all markets. Some assets are highly liquid — like stocks and bonds — that investors can sell at a moment’s notice. Have an unexpected medical bill and need $40,000? No problem. If you have money in the market and need it out, you could have it that same day […]

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