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Michael Thomsett

Options Trading: Mastering the Basics is Never All That Easy

By Michael C. ThomsettJul 16, 2012

No matter how many years you trade options, you have to continuously re-focus yourself, remember your rules of trading, risk standards, and much more.

Michael Thomsett

The dividend collar, an example - rewritten

By Michael C. ThomsettJul 14, 2012

Following is a rewritten version of my previous blog. The example contained an error, which has now been fixed.

Michael Thomsett

Options trading: The Dividend Collar, An Example

By Michael C. ThomsettJul 5, 2012

I have been blogging extensively about the risk-free, double-digit returns possible with the dividend collar. Most traders are curious and positive about this, but a few have claimed it will not work. Here is an example of a recent trade on which the dividend collar would have worked profitably - double-digit annualized returns and elimination of market risk.

Michael Thomsett

Options trading: Risk-free and double digits - is it possible?

By Michael C. ThomsettJun 29, 2012

Options traders hear a lot of wild promises about the riches you get trading options, but most of these schemes turn out to be a lot of hype and exaggeration. But here is an idea that actually does work.

Michael Thomsett

Options: Comparison of Risks in Synthetic Stock

By Michael C. ThomsettJun 28, 2012

The use of offsetting option positions creates "synthetic stock" - the no-cost or low-cost option combination behaves just like stock. The risks in the position, by the way, are the same as those risks in 100 shares, but for much less cash outlay.

Michael Thomsett

Options trading: Confusion about the Meaning of Volatility

By Michael C. ThomsettJun 27, 2012

So many traders are confused when they hear about "volatility." Why? Because there are so many different meanings of the word, five to be precise. Understanding the differences helps to manage options trading.

Michael Thomsett

Options Trading: Dangers of Rolling Covered Calls

By Michael C. ThomsettJun 22, 2012

Most covered call writers know how to roll a covered call to avoid or defer exercise. But this can create unintended losses or even have serious tax consequences.

Michael Thomsett

Options Trading: Is Diversification Necessary?

By Michael C. ThomsettJun 21, 2012

Traditional wisdom tells us that diversification is a foundation of wise portfolio management. Is this still true? Or are there ways around it? Can you put all your eggs in one basket without any risk of loss?

Michael Thomsett

Options Trading: A Style Guide

By Michael C. ThomsettJun 21, 2012

The world of options involves a complex jargon, listings, and nomenclature. Following is a suggested style guide for consistency is how options information should be expressed.

Michael Thomsett

Options Trading ? Another Look at Risk

By Michael C. ThomsettJun 20, 2012

Options traders need to constantly revisit the issue of risk. No one can escape the various kinds of market risk, and options are exceptionally associated with this reality. Even though many strategies are very conservative, every trader needs to know the risk levels involved in a strategy -- before they commit cash.

Michael Thomsett

Options: Credit Puts in a Swing Trading Program

By Michael C. ThomsettJun 15, 2012

Swing traders normally use shares of stock; but do they short sell to play a bearish trend? or do they hold and wait for the next bullish move? If they do, they're missing half of the swings. Options make more sense, anjd short optinos could make the most sense of all.

Michael Thomsett

Options Trading: Why Buy Insurance Puts?

By Michael C. ThomsettJun 13, 2012

The insurance put protects your appreciated stock by limiting losses in the event of a price adjustment. But it only works under specific circumstances.

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