“Strangle options” have a violent name, but have a vital role in investments. Strangle options are use both put and call options effectively to place bets on how stable the movement of a stock will be, regardless of the direction of the move.
Puts and calls are contracts that allow you the right to buy
Options
Investing in the stock market is an inherently risky endeavor. Throughout history, the major stock indices have risen and fallen sharply over both short and long periods of time, leading some investors to avoid stocks due to their volatility.
However, what if you could buy “stock insurance” that would effectively limit your portfolio losses should
“Buy low, sell high.” This simple piece of advice sums up the goal of every investor — to sell securities at a higher price than what was originally paid.
Of course, this is easier said than done. Buying and selling the right stocks at the right time is tricky business, even for investment pros who
A new type of investment has recently emerged that has piqued the curiosity of options investors. Commonly referred to as binary options, this investment is an options contract in which the payout is based on the correct or incorrect answer of a simple yes/no proposition. Binary options are also sometimes called all-or-nothing options or Fixed
Pairs trading, developed by analysts at Morgan Stanley in the 1980s, uses correlation between two similar investment vehicles to create a market-neutral trading strategy – where profits are not related to whether the overall market goes up or down.
Correlation of two investment vehicles refers to how their prices change relative to each other. If
“The Witching Hour” sounds like a bad public access television show, but it really refers to a particular time of day where odd and unexplainable things happen. When referring to stocks, it means pretty much the same thing, except that the reasons behind the activities are somewhat explainable.
Triple-witching days occur four times a year
Options are similar to futures, where two parties agree to a transaction at a future date for a set price. The difference is that futures are obligations to follow through on the transaction, whereas options are the right to participate in the transaction. In both cases, the goal is to generate short-term income.
Option contract
Stock options were formerly considered best left to stock trading professionals. But these days, trading stock options is almost as easy as buying and selling shares of stocks or mutual funds. Stock options are even allowed in self-directed Individual Retirement Accounts (IRA’s). Even as options have become easier to access and trade, they may still