Bargain Hunting for Stocks

Bargain Hunting for Stocks Found a beating up stock you wanna buy? Don't catch a falling knife. Here some different ideas about what you can do to bottom fish stocks.

Implied Volatility Percentiles

Implied Volatility Percentiles In thinkorswim the implied volatility for each option chain is shown in the trade tab. The implied volatility in the upper right of each chain is the average implied volatility for all the options within that option chain. How do you know if the implied volatility you see is high or low?…

Trade Liquid Markets

Trade Liquid Markets Mathematically speaking it is impossible to make money in a market with wide bid and ask prices. If there is a low liquid product and the bid and ask is wide you're losing as soon as you enter the trade. Don't pay to play. You wanna be the house.

Contrarian Scan in thinkorswim

Contrarian thinkorswim Scan First let's talk about what to expect in the final trading week of 2015. Typically at this time of the year there is a mix of tax loss selling and window dressing. Tax loss selling is when investors sell their beaten down stocks for the year in order to take their tax…

Don't Fall for the High Implied Volatility Trap

Don't Fall for the High Implied Volatility Trap Experienced options traders who learn about selling high implied volatility often fall into this trap. They scan for stocks only with very high implied volatility and inevitable try to sell that volatility and collect the high premium. Not a bad strategy you say. So what's the trap?…

Options Volume and Open Interest

Options Volume and Open Interest What is options volume and open interest? How is options volume and open interest calculated? Options volume tells you how many contracts are traded today. Open interest is calculated at the end of the trading day and open interest will not change during the trading day. An open contract consists…

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…