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Kerry Given - ArticlesKerry W. Given, Ph.D., aka Dr. Duke, has over twenty years of experience investing in the stock market and over seven years experience trading equity and index options. He has taken many classes on investing and trading through the years and has discovered first hand how difficult it can be to separate the financial facts from the marketing hype, myths, and get rich quick schemes. He can be reached at:
www.ParkwoodCapitalLLC.com Beware the Hype in Options TradingThe "get rich quick" sales pitch is common in many business areas. But it seems to be pervasive in the options trading education market. There Is No Free LunchWe all have a tendency to believe that someone out there has the secret formula or inside track to making money in stocks and options trading, and if we could just find that secret, we would be making lots of money with minimal effort. Of course, that simply isn't true. There is no free lunch. Vertical Spreads and Implied VolatilityThe credit spread and its corresponding debit spread at the same strike prices will always have virtually identical returns on investment (ROI). This paper addresses some of the myths surrounding the role of implied volatility in the vertical spread, both at initiation and over the course of the trade. Facts and Fallacies About Risk/Reward RatiosTrading strategies come in all sizes and shapes to suit anyone’s style and risk preferences. But the reality is that none of these strategies have an inherent advantage. Some trading education firms and authors of trading books will often claim that they have found the holy grail of trading and have the “best” trading strategy. Each trading strategy has its own set of advantages and disadvantages. One must learn to manage the trade in such a way as to develop a probabilistic edge. Option Expiration and ExerciseBeginning options traders often make costly mistakes due to either a lack of knowledge or misinformation about the basic parameters of options and their exercise. Examples of common errors include being surprised that one is unable to close an index option position on the Friday before expiration, or being surprised by an unhedged option exercise during expiration. This paper covers some of the basic concepts surrounding option expiration and how options are exercised. Put Time On Your SideOptions trading strategies that benefit from the time decay of options prices are attractive for monthly income generation. Pay attention to the calendar and put time on your side. Why Losing Trades Are Good For YouThe reality of the trading business is that a large percentage of one’s trades will be losers. Every business has overhead expenses, or costs of simply opening the doors for business. Trading is no different and trading losses are a large part of those overhead expenses. Once one accepts that aspect of trading, it becomes much easier to close losing trades early with minimal emotional attachment. Trade Options with a 90% Probability of SuccessIt is common to see web site banners or other advertisements similar to the title of this article, touting the benefits of options trades with probabilities of success of 85-90%. But that can be very misleading. Equity Option CyclesBeginning options traders often are confused about the organization of option chains. This paper covers the basic concepts surrounding which options are available at any given point in time, and how that may affect the options you trade. Any equity options chain will always have options available for the front month, next month, and two additional months. Those additional months will vary depending on the option cycle of which it is a member. Squeezing Additional Income From Your StocksThe covered call is an options trading strategy used to increase the income from a conservative stock portfolio. This strategy can add as much as 2-3% per month to a stock portfolio's income.
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