The put/call ratio is a popular sentiment indicator based upon the trading volumes of put options compared to call options. The ratio attempts to gauge the prevailing level of bullishness or bearishness in the market. Each day the CBOE calculates the ratio below: Volume of put option contracts / Volume of call option contracts On days when the major averages perform … [Read more...]
Putting stops on options
One thing that I think is critical for any option trader whether they are an option seller or a buyer is a stop. Just like stock traders everyone who trades options should have a stop that tells them when to get out of a trade. There are a couple different ways you can go about placing a stop on an option. The first is placing a stop loss based on the price of the option … [Read more...]
Dangers of naked puts
What a naked put option is? A put option gives the buyer the right to sell a given stock at a given price on or before a given date. It also gives the seller the obligation to buy the stock at the given price on or before the given date.Naked puts can be extremely dangerous strategies that can make one lose all of their money in the market in a very short time. However … [Read more...]
How to Buy a Call Option for Profit
Options are a best and the powerful way to increase the value of your portfolio while increasing your income and monthly cash flow. If used correctly with right decisions , trading options can make you enormous profits. Contradictory to it , if you are not appropriate with your trading, stock options can wipe out your earnings very quickly. One of the easiest and least risky … [Read more...]
How to Become Better at Trading Stock Options
Stock options have the potential to make money much faster than just owning a stock. Here are some ways to become better at trading stock options. Start out small. Before you start buying and selling stock options with huge investment , it is a good idea to start with small amounts, even if you can only invest one hundred rupees . This way you can learn from your mistakes … [Read more...]