Articles tagged with "basics"

How Bullish Traders Can Use Probabilities to Maximize Return

Do you ever find yourself in the situation where, you have a lot of conviction that the stock market, or at least a particular industry or sector, will make a notable move to the upside? Timing these moves can be difficult and even when traders are able to do so, buying the physical stock may […]

Looking for Income? Boost Your Payout With Probabilities

Everyone wants and needs income, whether it’s from working, in retirement or from trading. It’s a sought after source that provides us with not only what we need, but also with what we want. In today’s world of low – and in some instances negative – interest rates, finding that income is becoming harder and […]

Want to Profit With Options? Use Three Probabilities

When surfing the web, it’s easy to find several different sites that will generate a very common probability found in the options world: Probability of profit. Has a nice ring to it, right? The only problem is, the probability of profit doesn’t give you as much to work with as you think. At least when […]

Use Implied Volatility to Discover Stock Price Expectations

In the previous article, What is Implied Volatility in Options?, we introduced implied volatility and how it is calculated. Implied volatility is one of the most important factors used to assess the affordability or the luxury of an option. The judgment of option traders and investors in determining their best buying and selling strategies for […]

What is Implied Volatility in Options?

In our article on the Black-Scholes formula, we explained that before the popularity of the Black-Scholes model, it was difficult for investors to evaluate whether an option was fairly priced. When the formula was developed, people became more confident with the idea that it is indeed possible to enter a perfectly hedged position. This is […]

What is Return on Risk?

In business ventures or investment planning, two things are always calculated by the capital holder: risk of the return and return on investment. The relationship between risk and return is inevitable. Let us define the two. What are Returns? Returns are usually quoted in percentage terms. They represent the gains or losses of a security […]

Black Scholes Formula Explained

Black Scholes Explained: In this article we will explain how Black Scholes is the Theoretical Value of an Option. In financial markets, the Black-Scholes formula was derived from the mathematical Black-Scholes-Merton model. This formula was created by three economists and is widely used by traders and investors globally to calculate the theoretical price of one […]

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