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Education

  • A Basic Understanding of the Forex Markets

    Posted on 1/6/2009 in Education by Sam Seiden
    A brief overview of the Forex market along with an overview of the advantages of Forex trading...
  • Voodoo Averages In FX

    Posted on 1/2/2009 in Education by Kevin Cook
    I've often heard some investor-traders refer to technical analysis as "voodoo." Granted, there's a lot of so-called "indicators" out there that are more than a little mysterious and subjective, from Gann lines to planetary alignments. And some of their proponents are in their own galaxies as well. Now, even many of my option trader buddies who do volatility arbitrage are TA cynics. But, what I have to remind them of is that looking at volatility charts is a form of "technical analysis" just like looking at moving averages of price. They are both based on historical statistics, plotted on a graph in a given time frame. They hate when I tell them that, because they think that statistical vol arb is somehow more pure than "voodoo" statistical price analysis.
  • Putting The Bear To Work: Part 2

    Posted on 12/31/2008 in Education by Josip Causic
    Writing credit call spreads can be the key to victory in the battle for market domination...
  • Putting The Bear To Work: Part 1

    Posted on 12/30/2008 in Education by Josip Causic
    Writing credit call spreads can be the key to victory in the battle for market domination...
  • Ideas For Volatile Times: Upside-Down Split-Strikes

    Posted on 12/24/2008 in Education by Brian Overby
    In light of the insane volatility in the markets recently, I thought this week it might be helpful to cover a potential strategy on very volatile stocks: Upside-Down Split-Strikes
  • Spot Forex vs Forex Futures: Part 2

    Posted on 12/23/2008 in Education by Sam Seiden
    In this article, we'll examine the similarities and differences between the spot forex and forex futures markets...
  • Spot Forex vs Forex Futures: Part 1

    Posted on 12/22/2008 in Education by Sam Seiden
    In this article, we'll examine the similarities and differences between the spot forex and forex futures markets...
  • FED "All-In" Bomb Blows Up Dollar

    Posted on 12/17/2008 in Education by Kevin Cook
    The FED lowering it's effective Fed Funds target rate to between 25 bp and zero, and it's sweeping new debt purchase program, sent the euro up by 3-cents in 90 minutes, from roughly $1.38 to over $1.41. In this article we'll look at the EUR/USD pair as well as how to convert forex volatility for your trading range...
  • How To Initiate A Credit Spread

    Posted on 12/15/2008 in Education by Ken Trester
    In this article, we'll explore a strategy where we not only expect options prices to drop to zero, but we strive for it and position ourselves to take advantage of it with option credit spreads. Why? Because someone else's loss becomes our gain!
  • How Stock Splits Affect Options

    Posted on 12/2/2008 in Education by Bryan Perry
    Stock splits can happen for a variety of reasons, but even if you're only trading the options, you're still impacted by any changes that happen in the underlying shares. There's no reason to panic, and there's nothing you need to do. But when companies attract big-money investors and share prices start soaring, it's good to know what could be on the horizon for some of your investments.
  • The Great Fibonacci Debate

    Posted on 12/1/2008 in Education by Edward Ponsi
    Fib strategies have become very popular in forex trading. But today there are so many permutations and variations on this basic theme that sometimes the useful aspects of this technique get lost in the shuffle. This question opened the door for what we might call the "Great Fibonacci Debate". Read on...
  • Expand Your Options With Time Spreads: Long ATM Calendar Spread

    Posted on 11/24/2008 in Education by Lawrence D. Cavanagh
    A typical calendar spread is the sale of a shorter-term option and the purchase of a longer-term one. These spreads often offer the average investor the chance to sell overpriced short-term premium with relatively little risk. We'll kick things off by looking at a simple long at-the-money calendar spread...
  • Expand Your Options With Time Spreads: Calendar Put Spreads

    Posted on 11/24/2008 in Education by Lawrence D. Cavanagh
    A typical calendar spread is the sale of a shorter-term option and the purchase of a longer-term one. These spreads often offer the average investor the chance to sell overpriced short-term premium with relatively little risk. We'll kick things off by looking at a simple long at-the-money calendar spread...
  • When Does Early Exercise Make Sense (and Dollars)?

    Posted on 11/14/2008 in Education by Stan Freifeld
    This week I want to talk about the early exercise of options. In order for it to make sense to early exercise an option, there must be some positive cash flow that results from the exercise. We'll look at calls and puts separately to determine when the early exercise is the right way to go.
  • VIX, Forex & The Ted Spread: The Tide is Turning

    Posted on 11/12/2008 in Education by Edward Ponsi
    Since we are in the midst of a credit crisis, our chosen indicator for gauging fear in the current environment is the Ted Spread. Another famous "fear gauge", the CBOE's Volatility Index (VIX), is currently reflecting a slightly more relaxed environment. In this article, we chart the surprising similarities between the VIX and the Ted Spread.
  • Reducing Portfolio Risk With Credit Call Spreads

    Posted on 11/11/2008 in Education by Randy Frederick
    As an options trader, would you like to be able to determine both your profit potential and exactly how much money you're risking? If so, credit spread trading may be for you. When a trader establishes a bearish position using a credit call spread, the premium he pays for the option purchased is lower than the premium he receives from the option sold. As a result, he still brings in money when the position is established, but less than he would with an uncovered position.
  • Reducing Portfolio Risk With Credit Put Spreads

    Posted on 11/10/2008 in Education by Randy Frederick
    As an options trader, would you like to be able to determine both your profit potential and exactly how much money you're risking? If so, credit spread trading may be for you. We'll start by discussing how to use a credit put spread in place of an outright sale of uncovered put options...
  • Scamming The Forex Scammers: Avoid Automated Trading Systems

    Posted on 10/30/2008 in Education by Edward Ponsi
    Because Forex is relatively new to the retail trading public, scammers who make unrealistic promises are becoming a constant nuisance. Here's a good rule of thumb, and it doesn't matter if you're trading stocks, futures, options, or Forex – If anyone promises outlandish returns, don't believe it; it's probably a scam.
  • Option Margin Requirements (Or How Many Options Can I Sell?): Spreads & Portfolio Margin

    Posted on 10/29/2008 in Education by Stan Freifeld
    Examining spread margin and the impact of portfolio margin on your trading account...
  • Option Margin Requirements (Or How Many Options Can I Sell?)

    Posted on 10/28/2008 in Education by Stan Freifeld
    Breaking down the margin calculations for short option positions allows you to determine how many options you can sell.
  • Exploring the Diagonal Backspread

    Posted on 10/27/2008 in Education by Lawrence D. Cavanagh
    With the "diagonal backspread," you buy longer-term options and sell a lesser number of nearer-term options that are more in-the-money. Diagonal backspread opportunities often exist in volatile, relatively high premium markets, such as we have been experiencing. With the call diagonal backspread, you can take advantage of the fact that in nervous markets, the nearer-term lower-strike options become steeply overpriced, while the longer-term higher-strike options tend to remain fairly priced.
  • The Nuts & Bolts: Index Options Vs. Stock Options

    Posted on 10/24/2008 in Education by Stan Freifeld
    Exploring the difference between equity and index multipliers, settlement values, exercise and more...
  • Managing Risk Using Options: Cash-Secured Equity Puts (CSEPs)

    Posted on 10/22/2008 in Education by Randy Frederick
    Exploring when and how to use cash-secured equity puts (CSEPs)...
  • Managing Risk Using Options: When To Use Collars

    Posted on 10/21/2008 in Education by Randy Frederick
    Exploring when and how to use collars to manage the risk of your equity portfolio.
  • GBP/USD Volatility, Nimble Markets, Pip Slips, Park-It Markets & LIBOR

    Posted on 10/20/2008 in Education by Edward Ponsi
    Okay, so things are rough out there. But just because the world is facing financial Armageddon, and long-term investments are falling apart faster than the New York Mets in September, that doesn't mean your trading account has to suffer. In fact, some traders thrive in this rock 'em, sock 'em environment. Just take a look at the volatility in the Great Britain Pound – U.S. Dollar currency pair (symbol GBP/USD)...
  • FOREX: What Is The TED Spread & Why Is It At The Highest Level Since 1987?

    Posted on 10/14/2008 in Education by Edward Ponsi
    What Is The TED Spread & Why Is It At The Highest Level Since 1987?
  • FOREX: Explaining Average True Range (ATR)

    Posted on 10/13/2008 in Education by Edward Ponsi
    Currency volatility is at its highest point since the year 2000, as the markets swing wildly while absorbing bad news of historic proportions. The head spinning moves we've seen recently have driven the Average True Range, also known as ATR, of the major currency pairs to levels that are rarely reached. In this article, we will explore the basic mechanics of ATR and explain why it is so important to forex traders.
  • Traders Talk Live Radio w/Special Guest Mark Longo Now Available

    Posted on 10/10/2008 in Education by The Options Insider
    Traders Talk Live Radio (which airs on AM 560 WIND in Chicago) recently featured www.TheOptionsInsider.com founder Mark S. Longo as a special guest. Mark discussed the impact of the short selling ban on the options market as well as a few protective options strategies for these troubled times. Options Insider Radio listeners can find the complete broadcast here...

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