Webinar: How to Construct Vertical Spreads with LeeMalone - February 3rd, 2015
February 3rd, 2015 Watch List
Tuesday Morning Market Video – $DIS $WYNN $TWTR $CAT $USO $GDX $YHOO
Tuesday Morning Reads – 2/3/15
Stock futures overnight took a turn lower down over .5% but have since reversed course and are trading .5% higher. Yesterdays trading session had similar intra-day moves with the market gyrating between triple digit losses on the Dow Jones Industrial average before a late day surge left it higher by triple digits. Earnings tonight after the bell include the likes of Disney. Here is what I am reading this morning:
Trading Spreads: Spread Trades Vs. Outright Calls and Puts
Trading Spreads or Trading Outright Calls?
One of the biggest problems that an option trader faces is assessing whether an option is worth buying/selling. This is especially true when the implied volatility in a name is very high. For example, when the weekly straddle on the SPY costs $5 on a Monday (like it was today), if you wanted to play the SPY for a directional bet, you must be wondering whether it is a worthwhile play. In times like these a trader must consider trading spreads instead of just trading outright calls and puts.
Lets look at an example of how a spread would be beneficial when trading SPY when the IV is high.