Options and Futures

How To Read Options Listings

Options price listings vary in appearance from site to site, but most will contain the following basic information. Here's a breakdown of what they list and what it means.

Futures – Risks and Advantages

The terms 'options' and 'futures' appear together often enough to confuse even knowledgeable traders into thinking they are the same thing. But, while they have important similarities, options and futures are distinct trading instruments....

Trading 101

Stock and Bond trading strategies run the gamut from the simple 'buy and hold forever' to the most advanced use of technical analysis. Options trading has a similar spectrum....

Hedging, Trim Risks Not Bushes

Options are frequently used in hedging. A hedge is an investment made to offset the risk incurred by entering another investment. Ironically, the basic idea is to bet against oneself, in a way....

Blessed Are The Greeks - Part II

In Part I, we introduced the concept of the Greeks as trading tools and discussed delta and theta. We continue by examining gamma and vega. (Note: unlike the others, vega is NOT a Greek letter.)...

Values and Prices, Part II

In Part I, we outlined an example. MSFT (Microsoft) stock with a current market price of $27, and a June 30 call option with premium of $2. (I.e. an option whose characteristics are: contract to buy 100 shares of MSFT by June 16 at a strike price of $30. Remember the '30' refers to the strike price, not the expiration date.)...

Values and Prices, Part I

Unlike stocks, options have an expiration date. Unless a company goes bankrupt or buys back all its stock, the stock investor always has the choice to wait for a price correction. Sometimes that wait represents the triumph of hope over experience, but more on that elsewhere....

Trading Strategies, Basic Concepts

There are several basic trading strategies, but in order to execute any of them successfully an investor new to options will need to know some elementary concepts....

Blessed Are The Greeks – Part I

The ancient Greeks are justly praised for inventing much of elementary mathematics. But it was left to moderns to create the tools that help options traders quantify risk and calculate prices. Chief among these tools are several quantities known fondly as The Greeks: delta, theta, gamma and vega....