Showing posts with the label delta-option-greek


THE OPTIONS COURSE The  Other  Greeks T o create a delta neutral trade, you need to select a calculated ratio  of short and long positions that combine to create an overall posi tion delta of zero. To accomplish this goal, it is helpful to review a  variety of risk exposure measurements. The option Greeks are a set of  measurements that can be used to explore the risk exposures of specific  trades. Since options and other trading instruments have a variety of  risk exposures that can vary dramatically over time or as markets move,  it is essential to understand the various risks associated with each trade  you place. DEFINING THE GREEKS Options traders have a multitude of different ways to make money by trad ing options. Traders can profit when a stock price moves substantially or  trades in a range. They can also make or lose money when implied volatil ity increases or decreases. To assess the advantage that one spread might  have over another, it is vital to con

THE OPTIONS COURSE- Demystifying Delta

THE OPTIONS COURSE Demystifying  Delta Delta neutral trading is the key to my success as an options trader.  Learning how to trade delta neutral provides traders with the ability  to make a profit regardless of market direction while maximizing  trading profits and minimizing potential risk. Options traders who know  how to wield the power of delta neutral trading increase their chances of  success by leveling the playing field. In general, it is extremely hard to make any money competing with  floor traders.  Keep in mind that delta neutral trading has been used on  stock exchange floors for many years. In fact, some of the most successful  trading firms ever built use this type of trading. Back when I ran a floor  trading operation, I decided to apply my Harvard Business School skills to  aggressively study floor trader methods. I was surprised to realize that  floor traders think in 10-second intervals. I soon recognized that we could  take this trading method off