Extrinsic Value vs. Intrinsic Value

Sometimes, those calculations are very clear-cut, in the case of valuing an option at expiration, and other times not so much, as in the case of valuing an out-of-the-money option on a highly volatile stock that expires in two years.   What is Intrinsic Value? The intrinsic value of an option contract is its value […]

Comparing Iron Condor and Iron Butterfly

They’re selling options to traders looking for big wins, and when those options expire worthless, the seller of the option gets to keep the premium he collected.   Many traders use these spreads to trade range-bound markets, where there’s a sustained technical range with well-defined support and resistance levels. These are winning trades should the […]

What is Gamma Hedging and Why is Everyone Talking About It?

During the pandemic, people couldn’t get drunk, hang with their friends, or go golfing, so they replaced those hobbies with options trading. Bloomberg’s Matt Levine calls this phenomenon the boredom markets hypothesis. Here’s Matt explaining:   The weird thing about the coronavirus crisis is that it simultaneously (1) caused a stock market crash and (2) […]

Risk/Reward vs. Win Ratio

Part of approaching markets probabilistically is ensuring that your trades, on average, make money. Traders use several metrics like risk/reward ratio, Sharpe ratio, profit factor, and win rate to estimate what they should expect from their average trade.   However, your risk/reward ratio and win rate are the basic building blocks you’d use to understand […]

How to Get Started as an Investor

Most people make money the same way. They get a job and earn a wage. This can work fantastically, especially if you have a good career and plenty of prospects. However, it isn’t the only way to earn money and improve your finances.    One way to earn more money is through passive income, specifically […]

Market Orders vs. Limit Orders

Limit Orders   Market Orders   Stop Orders   Stop Limit Orders While the type of order you use might seem like a trivial detail, it can actually make or break a trade’s profitability. What is a Limit Order? In a nutshell, a limit order is a way to buy or sell a stock at […]

7 Steps To Improve Your Trading In 2022

If you learn to predict the future of stock and identify the best one as per your budget then the chance of winning the money becomes higher.  So, doing research on the stock market before investing your hard-earned money should be the main chant for the traders. You should set your own strategies and believe […]

Starbucks: Using Options to Play Capped Upside Potential Post-Earnings

Welcome to the ORATS earnings report where we scan for companies with upcoming earnings announcements, check out historical earnings information, and find a potential options trade. Consumer Discretionary (XLY) has been the best sector since the market’s bottom on June 16. Not all stocks have participated, though. Those with a global footprint, with particular exposure […]