The naked call is probably the highest-risk option strategy of all, right? Not necessarily. Most options traders associate risk with specific strategies. But you might want to question this assumption, based on a different definition of risks in trading: risk is not only determined by the attributes of a strategy, but more so by when and… [READ MORE]

The great dilemma for options traders is well known: Options close to expiration cost less but expire soon. Options with more time to develop profitably cost more. How do you balance these conflicting attributes? Trading short options very close to expiration might be the most powerful form of leverage you can use. Even though expiration… [READ MORE]

  One of the most difficult chart-reading skills is determining whether a directional change is a reversal or a retracement. During a dynamic trend, the distinction is a key one to recognizing when to exit, or when to hold on. As a general rule, retracement – a pause in the prevailing trend during which price… [READ MORE]

Covered calls are not only low-risk; they also open the door to many other conservative strategies. The “gateway” strategy introduces a world of low-risk ideas for traders and investors. Benefits of the covered call include income generation without excessive market risk. The covered call discounts the basis in stock, thus reducing market risk. There are… [READ MORE]