In Friday’s options post, we talked about the tendency of options traders to become enamored of a particular strategy simply because the trader is on a brief winning streak with that specific strategy. This propensity is particularly dangerous because market neutral income options strategies typically are entered monthly. So even a mere four month winning streak—only four successful trades in a row–allows … Read More
Avoiding Pitfalls: Safeguard Your Options Trading Journey
In a speech delivered to the American Enterprise Institute in late 1996—in the middle of the formation of the dotcom bubble of the 1990s—then Federal Reserve Board Chairman Alan Greenspan coined the term “irrational exuberance” to describe an illogical optimism about the economy that was pumping up stock prices well beyond any reasonable level. History shows that he was correct, … Read More
“Going to School” on Experienced Options Traders
This blog entry is the introduction to a series of posts about common mistakes made by options traders and how to avoid them.
SMB Welcomes a New Blogger- Seth Freudberg on Options
SMB is proud to announce the addition of a new trading educator to our blog. Seth Freudberg, a graduate of the Wharton School of Business, is the Director of the SMB Options Training Program (available in the Spring). He has mentored over 100 options traders and presented strategies to numerous traders throughout the world. Seth will be blogging about what … Read More
The “Pin Play”
Expiration day can have a strong effect on a stock. This is known as “pinning the stock”. A stock that is stuck at strike on expiration day when the general market is moving will move away from strike after expiration day. Stocks with high open interest at a particular strike usually get pinned near the strike on expiration day. This … Read More