The world has many ways to measure risk, but if the recent financial crisis has taught us anything, it is that asset price is the great equalizer in the fixed income markets. When global markets began to crash over a year ago, traditional measures of risk in credit markets became completely decoupled from asset...
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The expression “you can’t squeeze blood out of a turnip” refers to not being able to get something out of someone that they don’t have. Stock option trading can often feel like trying to squeeze blood from a turnip. However, with a little effort and some patience it is possible to squeeze blood from the...
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Sometimes when making lemonade there’s just not anymore juice that can be squeezed out of a lemon. In investing, there’s a similar idea with shorting a stock, sometimes the investors shorting the stocks have piled on so much, there’s no way for the stock to go down anymore. In general, short sellers of a...
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Double Diagonal – Neutral Strategy The Double Diagonal is a neutral stock options strategy. The Double Diagonal strategy is similar to an Iron Condor and can be considered a combination of a Calendar Call spread and a Calendar Put spread. The Calendar Put spread portion of the Double Diagonal is entered by selling an...
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As discussed in the next section, the physical commodities, especially energies and agricultural commodities such as Coffee, Soybeans or Sugar, generally have fundamentals (such as warehouse supplies, consumption trends, or planting and harvest cycles) that do not change over the course of a few months. By positioning only in markets with the most clear...
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An option’s value is made up of intrinsic value and time value. Intrinsic value is how much the option would be worth if it was exercised today. In other words, it is how far it is in the money. For instance, if August Crude Oil was trading near $52 per barrel, an August Crude...
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The real beauty of the covered calls strategy is making money on a stock, even when the price of the stock doesn’t move. Yes, it’s nice to make the extra income for a covered calls position when the underlying stock increases in price and the position is rolled, but what really adds oomph to the covered calls...
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