The bulls tried to make a rebound, but worries continued to bug them. It closed with merely a 4-point gain. The markets are still very uncertain. There are mixed reports about the market direction from here. Some believe the market wouldn’t stay down for long while others are already preparing for the worst. In my [...]

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Stock market volatility is an important consideration in options trading. Although it does not receive much attention in the community of stock traders, it is nevertheless becoming a useful, popular indicator for many trading professionals including the money managers nowadays. There are many authoritative books on volatility in options trading. Some which are written by [...]

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It is not uncommon for most traders who are new to options to think of simply buying a call or put to trade. While this is not really a bad idea per se to trade this way especially if you are able to predict the direction of the underlying assets, we can actually structure the [...]

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<< For those who missed the first part of this topic, click here. >>
Contrarian Trading
Many beginners start their trading by picking top and bottom once they got hold of a trading book or attended a trading course. Indeed, there are many trading resources and educational programs that advocate this contrarian method of technical trading. Contrarian [...]

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<< Basic Option Spread Strategies (Part 3) - Bull Put Spread
Bear Call Spread
Step 1: Sell lower-strike Call option
Step 2: Buy high-strike Call option at the same expiration date
Characteristics
A Vertical Spread, this is a Credit Transaction
Investor Sentiment
Moderate Bearish Strategy (large credit spread):
It’s considered a bearish strategy because you profit if the underlying stock price decreases.
Income, Profit [...]

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