Investment Arcana
Following up from the “what is a call option” article we turn to what is a put option. This one should be even shorter, because if you have read the “what is an option” and the bit on calls you should have a thorough understanding of options at their basic level. One thing that I…
Following up on the epic saga that was “what is an option” I present something more narrowly focused with put options forming the next article’s topic. The prior article mentioned what a call option is in pretty specific detail, but I thought I would go over it in a vacuum for the sake of sanity….
I tend to trade options pretty heavily in order to use leverage and not commit too much capital. Following up on my “what is a stock” article, I thought I would go over options again. I wrote an article explaining options before, but my writing style has evolved since then and so I thought I…
An option premium is the value of an option contract. I wish that were the end of it, but understanding a premium is critical to understanding options. At its purest form premium only refers to that amount that rises above the innate value of something. Think about collectible pennies. The face value of a penny…
If you’re familiar with stock trading including short selling you know there are multiple kinds of orders. If you are not familiar then you might only be familiar with buy and sell. Well with stocks there is buy, sell, sell short, and sometimes (though not always) buy to cover. Not even sure I’ve seen the…
I have not gone over Cisco’s ([stock CSCO]) earnings (transcript of call), this is more about the last two days when I was asked about Cisco by a friend. I said that the $18 calls for August and the $16 puts for August looked good. They were very low-cost. Initially, I thought Cisco would follow the…
I have incorporated this topic into my other article, but I wanted one that focused on this topic so I can reference it as necessary for future options trades. Understanding intrinsic value and extrinsic value can help you identify profitable opportunities. Remember options are an agreement to buy or sell the underlying stock at the…
Covered calls are a great, and in my opinion under used strategy from generating regular returns off open positions. “Capital preservation” is an old favorite among those people who want to use the stock market to grow their retirement savings to keep up with rising costs and some stable appreciation. They are some of the…
