1. Time DecayWhen dealing in options, the time value is the price of owning them until they expire. There are two types of time decay, implied volatility (IV) and implied time (IT). IV is the average return of an asset over the length of its expiration period. IT is the average amount of money gained off of an investment by selling it before its expiration date. When dealing with options expiring at different times, the shorter-term option will have less time decay than the longer-term option. As time passes, the longer-term option's price becomes closer to the spot price of the underlying security; conversely, the shorter-term becomes less valuable.2. Expiration DatesThe expiration dates are the final day that a contract expires. Every contract has an expiration date, whether it be a mont

1. Intro strategy Options trading strategy is a method of investing where you buy a call option and sell a put option at the same time. When you do this, you have effectively bought a contract that gives you the right to purchase shares at a certain price (the strike price) within a specific period of time. You then sell a contract that gives you a right to sell those shares at a lower price than what they were purchased at. In essence, you are selling insurance on the stock. If the stock goes down, you make money; if it goes up, you lose money. 2. Put-Call Parity Put-call parity states that if you own both a call option and a put option on the same underlying security, then the value of the options should be equal. This means that if you own a $100 call option and a $100 put option on the

1. Your Profit Goal Your profit goal should be set at the beginning of any trade. If you have no idea how much money you want to make, it's best to just start at $0 and build slowly. Once you've decided what your profit goals are, keep them in mind whenever you're trading. Don't forget about them! 2. Risk Management When it comes to risk management, don't let emotion get in the way of your decision-making. Sure, if you feel great then you should take risks, but that doesn't mean they'll work out well for you. In fact, it could be the exact opposite. You could lose everything, and even though you feel good about it now, it might not feel so good later. So instead of letting emotions cloud your judgement, take a step back and use logic. Calculate whether or not you actually need to take the

Earnings calls allow investors to ask questions about company's financial performance and discuss upcoming events that affect the stock price.  How do companies conduct an earnings call? Companies hold quarterly press conferences where executives present their findings and outlook for future performance. At times, the conference may be preceded by a pre-recorded video presentation. The earnings call begins with a statement from management regarding current results. This is followed by questions from investors and analysts. Usually, the CEO answers questions directly, while CFOs answer questions related to accounting issues. An analyst who asks a question may then get a follow-up interview. If there are no further questions, the management team will provide an outlook for the future, a

Dividends are paid out to shareholders if company profits exceed certain thresholds. How does the stock market work? What happens to the value of a stock over time? A fundamental understanding of how corporations make money is necessary to gain a full picture of the stock market. Let's take a look at some basic terminology related to stocks before we dive deep into how they actually work. The Basics of Dividend Stocks A dividend is an amount of cash or shares that companies pay investors out of their quarterly earnings (also known as net income). Investors who own stocks have the right to receive these payments in addition to any other forms of compensation they may be receiving. Companies are not obligated to pay out dividends, however in many cases they choose to do so in order to reward

Do you know what stops loss? Stops losses are ways to protect profits. You have to understand that if you don’t stop losses then these profits will get lost. What do you think are the best ways to avoid losing money? Should you avoid stop losses at all costs? Or should you take advantage of them? Stop loss trading might seem like a bad idea but actually, it can help you make more money than you would have otherwise if you were not using it. Here are some reasons why you should always use stop losses. 1 – You can minimize risk Stop losses are a way to minimize risks. If you lose money, you won’t lose everything. You will just lose a small amount compared to what you had originally invested. In case you are wondering how much you can lose, you can find out online. Once you have figured out

Know Your Risk Tolerance This may seem obvious, but if you don't have a risk tolerance, you won't trade. If you're not comfortable taking your profits and cashing out your losses, then good luck making any money. The biggest mistake people make is they assume that riskier trades will always pay off. In reality, many times you'll lose money by going long, and win back some of that loss by exiting before the market goes back down. You want to stay away from these high-risk positions until they start working. Don't Get Too Obsessed with Market Timing Trading is about keeping a level head, analyzing situations and responding accordingly. Many traders get caught up in trying to predict what's coming next, instead of just reacting to what happens. Don't fall victim to market timing and try to ti

1. Setting Up a Trading Journal You should start setting up a trading journal right after you get started in the market. Before doing anything else, you need to have a record of everything that you do. This way, if something goes wrong, you have a reference point to review what went wrong. If you want to keep track of how much money you’ve earned, then you would create a column in your journal called “Cash Earned”. If you want to know where you spend your money, you could add a column called “Spending Money”. You could even make columns for each month, so you know exactly where you spent your money throughout the year. 2. Daily Logging The first thing to do is log your trades daily. How much did you trade? What time of day was it? What were you thinking at the time? These questions can hel

Exchange traded funds (ETFs) are investment products that track an index, market sector, commodity, or asset class. These ETFs trade like stocks on stock exchanges. An Exchange Traded Fund (ETF) is offered by a fund company and designed to track and replicate an underlying index or benchmark. An index is a type of portfolio that tracks the performance of a particular market, industry or economy. Examples of indices include Dow Jones Industrial Average, S&P 500, FTSE 100. The fund shares are bought and sold much like normal securities, except they are bought and sold at a price quoted by an exchange. An example of an exchange is NASDAQ. When people hear about ETFs, many think of mutual funds that invest in individual companies. However, that's not what we're talking about here. In fact,

1. Fundamental Analysis Fundamental analysis is the first stage of analyzing stock data. Fundamental analysis analyzes the fundamentals of a company, including things like its financial statements, market cap, earnings, revenue, etc. 2. Technical Analysis Technical analysis is what most traders do after they have done fundamental analysis. Technical analysis involves using charts to analyze past prices to predict whether future price movements will follow certain patterns. 3. Market Cap Market cap is simply the total amount of money a company is worth. A high market cap means that a company's value is high; while a low market cap means that a companies value is low. 4. EPS (Earnings Per Share) EPS is calculated by dividing net income by the amount of shares outstanding. If the number is gr