**Before Opening Bell:**

Biogen $BIIB

KeyBank $KEY

HCA Healthcare $HCA

**After Closing Bell: **

Microsoft $MSFT

Tesla $TSLA

Chipotle $CMG

7**What are your plays tomorrow?**

What are your earning plays?

]]>Took $MCD (McDonald's) today as their earnings are on 7/28 and I have noticed daily $3-5 dollar movement so hoping for a pre-earnings run-up even if they don't perform well. Have 8/21 $210 call for $1.16. Currently down $18.00

Lastly I took a WMT (Walmart) a few weeks ago after that initial pop on the online Amazon like platform and healthcare news they are launching. Got a 12/18 $155 call for $1.97, which is currently up $114.00

Overall, my entire portfolio is in these 3 options so I have no cash balance and still down about $400 overall since starting 2 months ago but finally starting to have some logic to my plays. The goal is to create a cash balance of at least $200 and not re-deposit. Making sure I have TIME on my plays in case I make a poor play.

I will let you know how these turn out soon!

]]>

Greeks, including Delta, Gamma, Theta, Vega and Rho, measure the different factors that affect the price of an option contract. They are calculated using a theoretical options pricing model.

Since there are a variety of market factors that can affect the price of an option in some way, assuming all other factors remain unchanged, we can use these pricing models to calculate the Greeks and determine the impact of each factor when its value changes. For example, if we know that an option typically moves less than the underlying stock, we can use Delta to determine how much it is expected to move when the stock moves $1. If we know that an option loses value over time, we can use Theta to approximate how much value it loses each day.

Let's dive into the Greeks a bit more!

The first Greek is Delta, which measures **how much an option's price is expected to change**** **per $1 change in the price of the underlying security or index. For example, a Delta of 0.50 means that the option’s price will theoretically move $0.50 for every $1 move in the price of the underlying stock or index.

**Call options**

- Have a positive Delta that can range from 0.0 to 1.00.
- At-the-money (ATM) options usually have a Delta near 0.50.
- The Delta will increase (and approach 1.00) as the option gets deeper in the money.
- The Delta of in-the-money call options will get closer to 1.00 as expiration approaches.
- The Delta of out-of-the-money call options will get closer to 0.0 as expiration approaches.

**Put options**

- Have a negative Delta that can range from 0.0 to -1.00.
- At-the-money (ATM) options usually have a Delta near -0.50.
- The Delta will decrease (and approach -1.00) as the option gets deeper in the money.
- The Delta of in-the-money put options will get closer to -1.00 as expiration approaches.
- The Delta of out-of-the-money put options will get closer to 0.0 as expiration approaches.

You can think of Delta, as the probability that a given option will expire in the money. For example, a Delta of 0.50 means the option has about a 50% chance of being in the money at expiration. This doesn’t mean your trade will be profitable. That of course, depends on the price at which you bought or sold the option.

Also, you might think of Delta, as the number of shares of the underlying stock, the option behaves like. A Delta of 0.50 also means that given a $1 move in the underlying stock, the option will likely gain or lose about the same amount of money as 50 shares of the stock.

Gamma measures the **rate of change** in an option’s Delta per $1 change in the price of the underlying stock. Since a Delta is only good for a given moment in time, Gamma tells you how much the option’s Delta should change as the price of the underlying stock or index increases or decreases. If you remember high school physics class, you can think of Delta as speed and Gamma as acceleration.

Let's walk through the relationship between Delta and Gamma:

Delta is only accurate at a certain price and time. In the Delta example above, once the stock has moved $1 and the option has subsequently moved $.50, the Delta is no longer 0.50. As we stated, this $1 move would cause a call option to be deeper in the money, and therefore the Delta will move closer to 1.00. Let's assume the Delta is now 0.65. This change in Delta from 0.50 to 0.65 is 0.15—this is the option’s Gamma.

Because Delta can’t exceed 1.00, Gamma decreases as an option gets further in the money (ITM) and Delta approaches 1.00.

Theta is an old person, the closer they get to "expiration" their value decays. Theta measures the change in the price of an option for a one-day decrease in its time to expiration. Simply put, Theta tells you how much the price of an option should decrease as the option nears expiration.

Since options lose value as expiration approaches, Theta estimates how much value the option will lose, each day, if all other factors remain the same.

Because time-value erosion is not linear, Theta of at-the-money (ATM), just slightly out-of-the-money and in-the-money (ITM) options generally increases as expiration approaches, while Theta of far out-of-the-money (OOTM) options generally decreases as expiration approaches.

2Vega measures the rate of change in an option’s price per 1% change in the implied volatility of the underlying stock. While Vega is not a real Greek letter, it is intended to tell you how much an option’s price should move when the volatility of the underlying security or index increases or decreases.

**More about Vega:**

- Vega measures how the implied volatility of a stock affects the price of the options on that stock.
- Volatility is one of the most important factors affecting the value of options.
- A drop in Vega will typically cause both calls and puts to
*lose* - An increase in Vega will typically cause both calls and puts to
*gain*

Neglecting Vega can cause you to overpay when buying options. All other factors being equal, when determining strategy, consider buying options when Vega is below “normal” levels and selling options when Vega is above “normal” levels. One way to determine this is to compare the historical volatility to the implied volatility.

Rho measures the expected change in an option’s price per one percentage point change in interest rates. It tells you how much the price of an option should rise or fall if the risk-free interest rate (U.S. Treasury-bills) increases or decreases.

**More about Rho:**

- As interest rates increase, the value of call options will generally increase.
- As interest rates increase, the value of put options will usually decrease.
- For these reasons, call options have positive Rho and put options have negative Rho.

Rho is generally not a huge factor in the price of an option, but should be considered if prevailing interest rates are expected to change, such as just before a Federal Open Market Committee (FOMC) meeting.

Long-Term Equity AnticiPation Securities^{®} (LEAPS^{®}) options are far more sensitive to changes in interest rates than are shorter-term options.

You can see the effects of Rho by considering a hypothetical stock that’s trading exactly at its strike price. If the stock is trading at $25, the 25 calls and the 25 puts would both be exactly at the money. You might see the calls trading at a price of $0.60, while the puts may trade at a price of $0.50. When interest rates are low, the difference will be relatively small. As interest rates increase, this difference between puts and calls whose strikes are equidistant from the underlying stock will get wider.

Though not actually a Greek, implied volatility (IV) is closely related. The implied volatility of an option is the theoretical volatility based on the option’s quoted price. The implied volatility of a stock is an estimate of how its price may change going forward. In other words, implied volatility is the estimated volatility of a stock that is implied by the prices of the options on that stock.

Key points to remember:

- Implied volatility is derived using a theoretical pricing model and solving for volatility.
- Since volatilityis the only component of the pricing model that is estimated (based on historical volatility), it’s possible to calculate the current volatility estimate the options market maker is using.
- Higher-than-normal implied volatilities are usually more favorable for options sellers, while lower-than-normal implied volatilities are more favorable for option buyers, because volatility often reverts back to its mean over time.
- To a trader, solving for implied volatility is generally more useful than calculating the theoretical price, since it’s difficult for most traders to estimate future volatility.
- Implied volatility is usually not consistent for all options of a particular security or index and will generally be lowest for at-the-money and near-the-money options.

Since it’s difficult on your own to estimate how volatile a stock really is, you can watch the implied volatility to know what volatility assumption the market makers are using in determining their quoted bid and ask prices. By comparing the underlying stock’s implied volatility to the historical volatility, you can sometimes get a good sense of whether an option is priced higher or lower than normal.

]]>Stocks like $AMZN and $TSLA have high premiums that might be wayyy above your available funds. Or, you might be waiting to execute a current PUT/CALL option and you're low on available funds.

What can you do? Spreads!

Here is a fantastic clip on how spreads work if you prefer watching instead of reading.

In options trading, an option spread is created by the simultaneous purchase and sale of options of the same class on the same underlying security but with different strike prices and/or expiration dates.

Any spread that is constructed using calls can be referred to as a __call spread__. Similarly, __put spreads__ are spreads created using put options.

Option buyers can consider using spreads to reduce the net cost of entering a trade. Naked option sellers can use spreads instead to lower margin requirements so as to free up buying power while simultaneously putting a cap on the maximum loss potential.

The three basic classes of spreads are the vertical spread, the horizontal spread and the diagonal spread. They are categorized by the relationships between the strike price and expiration dates of the options involved.

Vertical spreads are constructed using options of the same class, same underlying security, same expiration month, but at different strike prices.

Horizontal or calendar spreads are constructed using options of the same underlying security, same strike prices but with different expiration dates.

Diagonal spreads are created using options of the same underlying security but different strike prices and expiration dates.

Bull vertical spreads are employed when the option trader is bullish on the underlying security and hence, they are designed to profit from a rise in the price of the underlying asset. They can be constructed using calls or puts and are known as bull call spread and bull put spread respectively.

While they have similar risk/reward profiles, the bull call spread is entered on a debit while the bull put spread can be established on a credit. Hence, the bull call spread is also called a vertical debit spread while the bull put spread is sometimes referred to as a vertical credit spread.

1]]>- Where are you from?
- Your trading experience? (beginner, novice, expert, legendary)
- What are your option trading goals?
- What do you hope to learn?
- What do you hope to contribute or share?

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