Recent content by Josip Causic

One of the questions that I often get asked is: “How do you enter a stop loss for a complex trade such as an Iron Condor?” This article is aimed at visually displaying the step by step process of entering the complex type of order that is known as Order Cancels Order or OCO using Thinkorswim. In...

This article looks at the same put strike for a long put and also a short put. First, focus will be placed on the long put's Delta. Then the same put strike price that was used for the long will be analyzed from the perspective of the short put. Delta has multiple levels of meaning. One of the...

The aim of this article is to explain how the option premium of an ITM long call changes as the underlying moves on the price chart. There will be three points in time that we will examine. We will use DIA, the Dow Jones Industrial Average Exchange Traded Fund, for our example. At the first...

There are new options out there called NASDAQ OMX Alpha Indexes Options. This article will explain some of the aspects of this "New Kid on the Block" for options. It is not a recommendation to buy or sell of any of these products. The information presented here is for educational purposes only...

One of the most common areas of confusion for the new trader is chart reading. For example, I had a trader who had been trading for years, but he did not know the difference between the two types of candlestick charts. As we were going through the technical analysis material, it was clear that...

Often, tape reading is viewed as something that held value back in the 1990s, yet I would argue that there is still value in it today, especially when it comes to options. This article will walk the readers through the process of discovering a possible trade using tape reading and then follow...

In this article, I will go over three possible outcomes for a Bear Call spread at the expiry. Those scenarios involve the price of the underlying closing within the spread, above the sold call, and below the sold call. Last week's article, "Iron Condor Revisited", had addressed the issue of two...

I have previously alluded to the importance of trading psychology by discussing two types of trading errors: Decision Making Error and Data Error. Some readers have indicated their desire to learn more about it. In this article, I will dive deeper into the topic of option trading and trading...

In this article we will examine a specific case of a debit and a credit spread in order to point out that there is virtually very little difference between the two. Instead of attempting to explain the concept by using a fictitious example, the stock XYZ with the one strike price being at this...

In this article, I will address one of the questions that I have recently been asked. It is on the topic of huge swings in the implied volatility on an individual stock. In order to get to the bottom of the issue under discussion, I have utilized the CBOE's Option Calculator. Here is the...

Part 1 At the end of one my classes at Irvine, an option trader stopped by for some small trading chit-chat. By the look in his eyes, I could tell that he had a large position that was eating away at his sleep as well as his finances. Without disclosing the trader's identity, I would like to...