Daily Option Trading Commentary

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As Expected - SPY 85 Failed - A Price Pattern Will Set In!

A week ago, the market staged a huge intraday reversal after testing horizontal support at SPY 85. That rally was sparked by the G20 meeting and traders did not want to go home short. That one-day rally stalled heading into the weekend. Leaders from the world's largest economies agreed that the financial crisis is dire and immediate action is needed. Unfortunately, the biggest economy has a “lame-duck” President in the saddle for two more months. The market resumed its decline on Monday and bad news seeped in from every corner. The “Big Three” were grilled by Congress as they pleaded…
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Option Trading Article of the Week

Option Trading - Put Writing Beats Covered Calls

Posted by Pete Stolcers on November 20

In today’s option trading blog I will respond to one of your questions, “Is Covered Call Writing Risky?”, I posed a question of my own. If you are doing a buy-write where you are buying the stock and immediately selling a call against it, is there a more efficient strategy? Before I dive in, let me address a few issues. Most people refer to any position where you are long a stock and short a call as covered call writing. I refer to covered call writing as a situation where the underlying stock has been purchased as a long term…

Stock Options Question of the Week

Front Month or Back Month Options?

Posted by Pete Stolcers on August 2

Question Today Dan W. asks, "Your last couple of recommendations have been for near month put options with very little time left. Why not use an option with 30 or 60 days to buy more time for a move? I read that you should never hold a an option with less than 30 days remaining because of declining time value, theta."

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