Creating synthetic long stock lets you open an options-based position that behaves exactly like 100 shares of stock, but without requiring you to invest in shares. This also means that market risk is limited, by the nature of the offsetting option positions. An example: Chipotle closed on December 19, 2016 at $389.50 per share. If… [READ MORE]

When the overall market is bearish, how do you manage the risk is going short? If a long put by itself is too expensive and a short call is too risky, the synthetic shorty stock strategy offers a solution. Synthetic short stock acts exactly like shorted stock, but with less risk. It consists of a… [READ MORE]

Experienced traders are at risk for a very specific potential problem: trading blindness. Inexperienced traders have to overcome their own learning curve due to mastering of options jargon, getting accustomed to the trading rules, and avoiding a beginner’s mistakes. These are easily overcome with self-education, online learning, and simple practice. Starting out with virtual trading… [READ MORE]

Timing for options trades relies on many price signals and confirmation. Even so, knowing when trends are likely to continue or to end is a skill of its own and many traders have timed entry and exit poorly because the trend was misread. One signal helps overcome this problem. Bollinger Bands (BB) tracks the trend… [READ MORE]