Author: ivtrades

This is a long post, it helps you understand options a bit better and make some profitable decisions in the future! I try to make theta and options easier to understand by relating it to real estate and moving one step at a time. Let’s dive into the world of Theta and options trading!! #1:…

I’ve been asked and have explained The Wheel strategy many times, so I thought it may be a good idea to write it down all in one place for posterity! This is the only options strategy I use and IMHO it is about as low risk and reliable as options trading gets. You will NOT get…

To anyone new to trading options. You need to understand, this is a craft. A skill. You must learn and respect it, or it is going to disrespect you. Very violently in some cases. You HAVE to know what you’re doing, not just THINK you know what you’re doing. You must understand the Greeks. This is essentially what your option is. If you…

The time Value of Options refers to the value of the options contract beyond its intrinsic value. Time value is equal to the extrinsic value of the options contract. Out-of-the-money options consist only of time value. The value of in-the-money options can include both intrinsic value and time value. See also In The Money Options,…

This is a measure of Historical Volatility computed as the annualized standard deviation of returns over a period of days (20, 30, 90 days). See also Implied Volatility & Historical volatility

This is a spread trading strategy that involves buying and selling options, but the trader typically sells a greater number of contracts sold than what is purchased. See also Ratio Back Spread & Ratio

This is a spread strategy that involves selling options and buying a greater number of out-of-the-money options. Backspreads are often in a ratio of 1 to-2 or 2-to-3 and most traders use them because they work well when there is an increase in market volatility especially when they think the market is about to move…