Options Trading

Buy to open and buy to close are the two order types that tell your broker whether you are starting an options position or getting out of one you already sold. They are not interchangeable, and picking the wrong one is one of the fastest ways to end up in a trade you did not…

Futures options let you trade the same contracts futures traders use, with the risk of a long option instead of the risk of an unlimited position. The mechanics are close enough to equity options that most of what you already know transfers, and different enough in margin, expiration, and taxes that the gaps will cost…

In the options trading world, strategies have various names, such as the jade lizard. The jade lizard is one of many options trading strategies worth understanding before you put one on. The popular options trading financial network Tastytrade often talks about this trade, so let’s dive into how the jade lizard strategy works. What is…

Selling a put option to collect premium is one of the most common ways options traders generate income, but doing it “naked,” without setting aside the full cash to buy the shares, changes the risk picture completely. Here is what a short put actually is, how the mechanics and margin work, what can go wrong,…

When you place an options order, your broker needs to know one more thing besides buy or sell: are you opening a brand new position, or closing one you already hold. That’s what “sell to open” and “sell to close” tell them, and mixing the two up can leave you holding a position you never…

James Cordier’s hedge fund lost $150m from selling options. His investors received an email stating they had lost all their money and owed more to cover a margin call. He then recorded a cringe-worthy apology video where he apologized for ten minutes about how bad he felt. You must learn about the OptionSellers blow up…

SPX and SPY both track the S&P 500, but the options written on them are not interchangeable. Contract size, settlement style, tax treatment, liquidity, and even trading hours differ enough that picking the wrong one can cost you in fees, taxes, or timing. Here is how SPX and SPY options actually compare, and which one…

Iron condors and iron butterflies share the same four-leg structure: a short call spread paired with a short put spread, all expiring on the same date. The difference is where you place the short strikes, and that one design choice changes the profit zone, the max profit, and the volatility environment each strategy thrives in….

If you want to start trading options, I created the ultimate guide to generating income with options in this post. You can also learn about technical analysis for options trading to improve your trade timing. Options Trading Terminology Before you learn how options work, you must know all the basic options trading terminology. If you…

The poor man’s covered call (PMCC) lets you run a covered-call-style income trade without tying up the cash for 100 shares of stock. Instead of owning shares, you buy a deep in-the-money, long-dated call and sell a shorter-dated call against it, collecting premium the same way a traditional covered call does. It is a bullish,…