Options traders are always hungry for new, valuable sources for information. If you are a conservative investor who wants to learn how to create appropriate trades within your risk profile, and how to use options as a portfolio management tool, here are four suggestions for you:
Market risk exists whether you own shares of stock or use options to anticipate market-wide movement. In that sense, options are not higher-risk than stocks. In fact, because one option lets you control 100 shares of stock, they are far less risky. If you can benefit from stock price movement for about 5% of the cost of those shares, your risks are lower.
Most “swing traders” -- those moving in and out of positions in two- to five-day short-term price swings -- use shares of stock for their strategy. But options can vastly expand your swing trading program with less risk and greater leverage. Here are five ways this can work for you.
We have always viewed specific option strategies in terms of risk. Naked contracts, for example, are high-risk. Even basic long options are high-risk because most of them expire, right? Not always. Here is a new and expanded way to look at risk, even for those strategies widely believed to always be high-risk.
In Japanese, a “tasuki” is a sash used to hold up a shirt sleeve, a type of garter. In a tasuki gap, a parallel is found in the three sessions, in which a directional gap is upheld in the third and crucial session. The gap is not filled, so that the direction of movement is strongly supported.
In the 1940s the average holding period for stocks was as high as 10 years. This is unheard of today. Now the average is down below one year and many active traders (day traders, swing traders) are looking at being in open positions for a matter of days, not even weeks or months.
The traditional view of naked call writing is that this is one of the highest-risk strategies possible. But is this necessarily true? Can naked call writing be safer than most of us think? There are ways of looking at risk that challenge traditional thought and even present a scenario for low-risk naked call writing.
Many traders define themselves as conservative. But is this accurate? or does your trading style contradict the standards of "conservative" trading? Here are 5 ways to test how conservative you are in your trading and investing.
Do we really understand investment risk and what it means? I have been trading for 35 years but I find myself re-thinking this question in profound ways.
One of the more obscure candlestick patterns is the side-by-side lines. This comes in four types: white bull, white bear, black bull and black bear. The similarity in appearance and meaning is confusing, so that the side-by-side lines formation is easily overlooked. However, it can provide important reversal signals and, along with other candlestick formations, can be a valuable weapon in every chartist’s skill set.
This descriptively named formation involves three sessions. The first two days form a doji star -- two sessions with a gap in between -- and the third is a session moving in the opposite direction after a gap.
Among the complex patterns you see in candlesticks -- involving three sessions -- two of the more subtle are the inside and outside formations. These consist of two parts: inside patterns begin with a two-session harami and a third decisive day; outside patterns start with a two-session engulfing formation and then a third, decisive day.