| Attracting Profits (Advanced Options - The Edge) “October - This is one of those peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February”. – Mark Twain Now that you’ve learned the basics of options, we will discuss advanced information that savvy option traders need to know for a trading advantage. Options have a number of components that influence their moves and when you first learn some of these advanced concepts you may think that option trading is complicated. But keep reading and studying these lessons and you will find these concepts are a lot easier than you first thought. You will also find that you can use a lot of this information to make a difference in the success of your trade. First, let’s talk about the pieces that make up an option price, how they are calculated and how and why they move. You learned in Chapter 5 that an option price is made up of intrinsic value (IV) and time premium (TP). Did you learn your lesson well in Chapter 5? Are you with us? If not, you better go back and study because it will be ... Continue Reading |
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