Capital Allocation and Implied Volatility

Capital Allocation and Implied Volatility How can you use implied volatility to help you allocate capital? In this video Don Kaufman of TheoTrade shares why you should look at the implied volatility of a stock before determining your capital allocation size. Different stocks and ETFs have different expected moves. Therefore you should not risk the…

Theta Decay

Theta Decay Theta decay also known as time decay is the daily whittling down of an options value. Theta decay is much steeper the closer you are to the expiration of the option chain. Most option traders aren't aware that theta decay is actually closely tied to implied volatility. Theta decay is not linear because…

Implied Volatility

Implied Volatility What is implied volatility and how does it different from historical volatility? Most people get these two mixed up. Implied volatility is based on the options in a given chain. The Implied volatility is derived from the mid price of the actual bid and ask price for a specific option. You should know…

End of Year Selling Stocks

End of Year Selling Stocks Will the S&P finish above or below the zero line at the end of the year? There are several factors that will impact the markets in the final trading sessions of the year. They include tax loss selling, index re-balancing, quarter and year end window dressing. Let's take a look…

Why Sell Volatility This Low?

Why Sell Volatility This Low? Should you really be selling volatility right now? Let's take a look at what's moving this market and what's not. We will start out with sectors then dive into specific ETFs like the XLF. I'm going to start building my case for why you want to wait to start selling…

Don't Over Trade This Week

Don't Over Trade This Week Don't fall into the end of year trap of over trading. Volume is light and volatility is high. This is the time of the year I like to do an end of year review of my trading. What worked and what didn't work? What are my expectations going into the…

Santa Claus Rally

Santa Claus Rally Dead? Four days before Christmas and the S&P has gone no where this year. In fact the S&P is down 2.5% on the year. Everyone is still talking about the Santa Claus rally. I caution you there is still a lot of volatility in this market. With a short week volatility and…

Introduction to Vertical Spreads

Introduction to Vertical Spreads How do you mitigate your risk trading options? Vertical spreads of course! Vertical spreads allow you to define your risk. No stop orders required. You know exactly what your risk is before you place the trade. Vertical spreads are a great way for new or experienced traders to profit in the…

Scalping Futures

Scalping Futures What do you do on a day when you're up almost $17,000 in your positions? You scalp future of course! Scalping futures can be a great way to hedge a big up day or just pass the pass the time. There are techniques to scalping futures that if done right be fun, profitable,…

Buy Volatility

Buy Volatility Volatility is a buy. You thought you'd never hear me say that one. The reality is the markets are moving and the volatility is shrugging. When is the last time you saw the S&P down 30 points and the VIX move 50 cents? The markets are telling us there is more room to…