Ticker tape trading strategies
Get fresh market insights when you want them. Have The Ticker Tape delivered right to your inbox —daily, weekly, or monthly. In the world of numbers and analysis, a gut feeling can seem squishy and out of place. It can make us confident or wary, no matter the analysis we used to determine a bullish or bearish directional bias. In a word, our gut can provide a reality check. Figure out whether your gut is making you slightly confident, semi-confident, or very confident in your bias. This trade is designed to produce a credit, which is the max profit the trade can make less transaction costs. The max loss is the difference between the strikes minus that credit plus transaction costs. SHORT OTM PUT VERTICAL. Strategies illustrative purposes only. What the short OTM put vertical does is potentially profit tape only if the strategies rallies, but also if it sits at its current price, or even drops a bit. More than a bit would mean the stock drops below the short strike plus the credit received, in order to incur a loss. As long as the price of the stock is higher than the strike price of the short put strategies the expiration of the options, this position can be profitable. The short put vertical tape also have a lower margin requirement than long stock. NAKED, SHORT OUT-OF-THE-MONEY PUT Huh? A short OTM put takes in a credit the premium received for selling the putwhich ticker its max potential profit less transaction costs. The max potential loss ticker the strike price of the put minus the credit you realize for selling it. The strategy also includes a high risk of purchasing the underlying stock at the strike price when the market trading of the stock will likely be lower. Wee bit bigger potential reward, lots more risk. Still a higher probability strategies success than a long vertical position, since you could potentially make money even if the stock stands still. But think about it. The short put has no more risk than long stock. The losses for both are large if the price of the stock drops sharply, let alone goes to zero. A short OTM put also has no greater margin requirement than long stock. In trading margin account, the margin on a short put can strategies lower than on long stock, and in an IRA, the tape on a cash-secured short-put position and a long stock position can be roughly the same. The short OTM put and the short OTM put vertical share some characteristics. So, what makes the short OTM put the choice for the semi-confident trade? The short OTM put can have a higher credit than a shortput vertical, and thus larger potential profit. If the short put of the short-put vertical and the short put are at the same OTM strike price and same expiration, the credit for the short OTM put vertical will be lower than the credit for the short-put. The difference is the cost of the long-put component of the short-put vertical. The short tape gives you potentially more profit than a short-put vertical in exchange for a higher margin requirement and higher potential risk. A bullish long ATM call strategies is made up of a long slightly, in-the-money ITM call and a short OTM call in the same expiration. You pay a debit when you ticker this trade, and the debit of the long ATM vertical is its max possible loss. The max potential profit is the difference between the strike prices, minus the ticker paid, including transaction costs, and occurs when the stock price is higher than the strike price of the short OTM call at expiration. That means the price of the stock has to go higher for the ATM vertical to profit. If the stock drops, the long ATM vertical will likely lose some money, and the max loss happens when the price strategies the stock drops below the strike price of the long call ticker expiration. LONG ATM CALL VERTICAL. The long ATM call vertical may be a confident choice because it can have a higher delta than an OTM short put vertical, or even a short put—meaning, it can be more responsive to a rise in the stock price. Neither caps your upside potential, so why choose it? Compared to long stock, the long ATM tape vertical can have less potential risk, for one. Nothing is guaranteed to go higher. If the stock does drop sharply, the loss on the long stock can be much greater than on the long vertical. Also, the long ATM call vertical can have ticker lower margin requirement than long stock. That means that you tie up trading of your trading capital with verticals. Compared to a ticker call, the long ATM vertical can be less sensitive to changes tape volatility vega and time thetabecause the vertical has both a long and short option in it. The negative vega in the short option offsets the positive vega in the long option, resulting in a ticker vega than a single long option. Likewise, the negative theta of the long option tape offset by trading positive theta of the short option, resulting in a net-lower time decay than a single long option. The key is understanding that your gut drives strategy, not trade size. Remember, your gut gets you in the game. Your trading hopefully gets you paid. We dig deep into diverse topics, including options trading, bond futures, retirement investing, college savings plans, stock market volatility, investor research tools, and more. Naked option strategies involve the highest amount of risk and are only appropriate for traders with the highest risk tolerance. Spreads and other multiple leg option strategies can entail substantial transaction costs, including multiple commissions, which may impact any potential return. Supporting documentation for any claims, comparison, statistics, or other strategies data will be supplied upon request. Market volatility, volume, and system availability may delay account access and trade executions. Options are not suitable for all investors as the special risks inherent to options trading may expose investors to trading rapid and substantial losses. Please strategies Characteristics and Risks of Standardized Options before investing in options. Supporting documentation for any claims, comparisons, tape, or other technical data will trading supplied upon request. The information is not intended to be investment advice or construed as a recommendation trading endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading. Special Offer Client Login. Before You Gut Find trades your gut feels good about. From the MarketWatch tab, go to the Quotes sub-tab. Create Your Own Dow-to-Gold Ratio. Saving Traders, One Feature ticker a Time. INSIDE THIS ISSUE Best Content-Driven Website for Ticker Tape Content Marketing Awards. Tape Retirement Planning Rollover IRA IRA Guide IRA Selection Tool Managed Accounts Income Solutions Trading Planning. Past performance of a security or strategy does not guarantee future results or success.
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