A commonly quoted statistic is that only the top 10% of traders are ever successful. If you’ve started trading options with little success, rest assured: you have come to the right place. Here at Option Posts, we believe that trading is a skill that can be taught to anyone willing to learn. Taking the time […]
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Options are classified as In-the-Money (ITM), Out-Of-The-Money (OTM), and At-The-Money (ATM), three categories which describe the position of the option strike price relative to the current stock price. These categories are called option “moneyness.” Let’s take a look at these moneyness categories with examples. In-the-money (ITM) An option contract is said to be in-the-money when […]
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Options trading is unique in that options contracts expire at a specific point in the future; this time component makes them fundamentally different from other kinds of trading. However, timing can be a tough aspect for new traders to understand. For any one stock’s options, you can choose from many different expirations, ranging from a […]
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Option profit/loss diagrams visually represent an option strategy’s profits or losses as the different inputs into the pricing model change. As you dive deeper into more complex options strategies with multiple buying and selling options, these diagrams will be the key to seeing how to profit from time decay and volatility (factors unrelated to stock […]
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Every successful business has some advantage over its competitors, and the options trading business is no exception. In this post, we’ll explain our edge in options trading; understanding our strategy is one of the most important steps you can take towards becoming a successful options trader. Since successful options traders operate a lot like insurance […]
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The options expiration and assignment process can often be confusing for new options traders. In this article, we will clearly explain the entire options expiration and assignment process to give you the knowledge and confidence to get started in options trading. Options Expiration Basics Option contracts have a finite life. There is a specified time […]
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Selling Puts for Beginners: How to Buy Stocks at a Discount If you want to understand how to buy stocks at a sizable discount AND get paid for doing so, learn how to sell put options. In this article, we’ll help you get started with this simple but powerful strategy. If you missed our article […]
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So, what is an option chain? Reading an option chain, or option pricing table, is a fundamental skill to master before stepping into any option trade. In this post, we’ll show you how to read an option chain step-by-step. An option chain, simply put, is a list of all of a stock’s option contracts which […]
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Like any formal agreement between two parties, option contracts clearly delineate all of the parameters of the contract between buyer and seller. In this article, we’ll explain each of the five key option contract specifications in detail. Here is an example of an option contract: XYZ February 50 call for 1.50 The pieces of this […]
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Understanding Option Greeks As a beginning options trader, you have likely heard of “Option Greeks.” The Greeks are fundamental metrics we use to make informed trading decisions and to gauge our trades, portfolio risk, and profit potential. The Greeks measure how an option price or premium will change in response to changes in any of the […]
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