Author: Dan Passarelli

Edge. “What’s edge?” you ask. Basically it’s like crack for option traders. It is what you just can’t resist! Experienced option traders trade when (an only when) they see edge. They just...

It’s bad enough fighting the crowds at the mall, but try shopping for option trades this time of year! Trading options can be a little trickier during the holiday season because of some unique seasonal anomalies.First, it...

Remember about seven or eight years ago when the bid-ask spread in a typical option contract was so wide you could drive a proverbial truck through it? When I was a market maker on the CBOE trading floor back then, most of my...

A theta trade? What’s that? There was once a day when 80 percent of the traders I’d talk to at my trading seminars traded nothing but credit spreads, iron condors, time spreads and butterflies: i.e. theta spreads....

On the one hand, it seems like a good time to be an option buyer: limited risk, leveraged reward, etc. But on the other hand, they’re just so darn expensive! Right now implied volatility is at historic highs. That means,...

A backspread is an option trading strategy that enables a trader to profit when the underlying security is volatile. Though these strategies are fairly simple to construct, they are complex to trade. Unless a trader has a good...

There is a knack to buying puts. The key is to buy the option before the stock falls. Easier said than done. Surely no one knows with certainty whether a stock will fall or not. (If they did, the wouldn’t need to hedge...

I don’t have many favorite option trading strategies, but one of them has to be selling puts at a market bottom. Now don’t get me wrong, the term “market bottom” can really only be used with accuracy when...

Lots of option traders buy calls hoping to profit from a bullish move in a stock. It is a leveraged trade that can create huge percentage profits when the trader is right and, of course, potentially pretty big percentage losses...