Options

How to Write Covered Calls: 4 Tips for Success

When writing a covered call, you’re selling someone else the right to purchase a stock that you already own, at a specific price, within a specific time frame. Since a single option contract usually represents100 shares, to run this strategy, you must own at least 100 shares for every call contract you plan to sell. […]

Options

Options Trading Mistake #6: Waiting too long to buy back your short options

This mistake can be boiled down to one piece of advice: Always be ready and willing to buy back short options early. Far too often, traders will wait too long to buy back the options they've sold. There are a million reasons why: You don't want to pay the commission; you're betting the contract will […]

Options

How to Avoid the Top 10 Mistakes New Option Traders Make

Option trading is a way for savvy investors to leverage assets and control some of the risks associated with playing the market. With options, it’s possible to profit whether stocks or going up, down, or sideways. You can use options to cut losses, protect gains, and control large chunks of stock with a relatively small […]

Options

Investing in Options: A Beginner’s Guide (Part 1)

Options are a versatile financial instrument for investors. They are also complex and somewhat risky. It's important that you understand the basics of option trading strategy before diving in. What is an option? Options are contracts that give you the right to buy or sell an asset at a fixed price (strike price) for a […]

Options

Options Trading Mistake #7: Failing to factor earnings and dividend dates into your strategy

It pays to keep track of earnings and dividends dates for your underlying stock. For example, if you've sold calls and there's a dividend approaching, it increases the probability you may be assigned early. This is especially true if the dividend is expected to be large. That's because option owners have no rights to a […]

Options

Options Trading Mistake #8: Not knowing what to do if you’re assigned early

If you sell options, just remind yourself occasionally that you can be assigned. Lots of new options traders never think about assignment as a possibility until it actually happens to them. It can be jarring if you haven't factored in assignment, especially if you're running a multi-leg strategy like long or short spreads. For example, […]

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