Monthly Archives: September 2016

17Sep
2016

Options Trading Advisor

Financial Advisor Options Strategies

Options Trading Advisor Academic studies indicate that about 50% of all financial advisors have traded options for their clients at some point. The most popular option strategy used by financial advisors is the covered call. We already did an analysis on the covered call, so please refer to that article for more information on that […]

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17Sep
2016

Advisors Use Covered Calls

Financial Advisor Options Strategies

Advisors & Covered Calls According to academic studies approximately 50% of all financial advisors trade options. About 4% of all AUM is in options trading and this number is increasing. The most popular strategy used by advisors is the Covered Call. Why do advisors use the Covered Call as their core options strategy? What are the […]

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17Sep
2016

Options Strategies For Advisors

Financial Advisor Options Strategies

Options Strategies For Advisors: How should a financial advisor choose an appropriate options strategy for their clients? This would depend on the purpose of the options. For example, if an advisor is long stock, there are various ways to offer protection for client accounts in case of a market crash. Bearish Options Strategies […]

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17Sep
2016

Higher Order Greeks

Financial Advisor Options Strategies, Higher Order Greeks

Higher Order Greeks and Various Options Strategies Surface Greeks v. Higher Order Greeks Some surface (first order) Greeks: Delta, Theta, Vega Some higher order Greeks: Vomma, Vanna, Veta, Charm, Lambda, Gamma, Ultima Although you are not aware of it, you are configuring your higher order Greeks when you trade options, and their final output is […]

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17Sep
2016

Put Ratio Spread Case Study

Financial Advisor Options Strategies

The Put Ratio Credit Spread, similar to the “naked put”, has nearly unlimited loss potential when the underlying price falls, while it has very little profit potential if the underlying increases in price. This strategy falls into the high POP (Probability of Profit) category, but the risk-to-reward ratio is at a serious disadvantage. One loss […]

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07Sep
2016

Understanding Higher Order Greeks

Financial Advisor Options Strategies, Higher Order Greeks, Options Greeks

Managing your option Greeks is essential to every option trader, especially to a portfolio manager. Most option traders are limited to managing the Greek Delta only. However, in order to trade options safely, you must know how to manage your Delta, your Vega and your Theta on a deep level and this requires knowledge of higher order Greeks…

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07Sep
2016

Options Backtesting Software Example

Options Strategy Backtesting Software

Back Test of the Tastytrade Credit Spread SJ Advisor specializes in developing options trading systems for fund managers, and we’ve partnered with a software service that specializes in backtesting options strategies. We’ve received numerous inquiries from our options trading community, and people want to know how well the tastytrade credit spread formula back-tests.     People have inquired about the… View Article

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07Sep
2016

Put Ratios and Trading Volatility

Higher Order Greeks, Options Greeks, Trading Volatility

  Internal Greeks are not always volatility-compatible.  This is a good class on volatility trading, which is essential education for all traders who seek long-term success with options.  To master volatility trading you have to understand Vega and how to manage it with Vomma and Vanna.  We look at the put front ratio spread for… View Article

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07Sep
2016

Short Strangle Backtest

Financial Advisor Options Strategies, Options Strategy Backtesting Software

In this article we backtest our trading method and short strangles to illustrate the importance of trade design, money management and long-term performance studies.  These backtests are done using portfolio margin simulated accounts and are based on the TIMS margin method.   Trade Sizing: 5% In this test we utilize 5% of the portfolio margin… View Article

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