When establishing a protective put, the investor wants prices to move higher but is buying puts as a form of insurance should stocks fall instead. If the market falls, the puts increase in value and offset losses from the portfolio. Similarly, predicting when a volatile stock is exhausting its current bullish momentum can mean shorting […]

Some investors may be more willing to endure assets with high volatility than others. Volatility can create opportunities for traders, as it makes it so there are more instances where they can potentially profit from buying and selling assets. For example, the Sharpe ratio is a calculation that measures how your investment risk is paying […]

A speculator might think the price of a stock will go up, perhaps based on fundamental analysis or technical analysis. The VIX was the first benchmark index introduced by CCOE to measure the market’s expectation of future volatility. Remember, the key to successful options trading lies in combining solid analytical tools with a deep understanding […]

Call and put options are generally taxed based on their holding duration. Beyond that, the specifics of taxed options depend on their holding period and whether they are naked or covered. Boxes are another example of using options in this way to create a synthetic loan, an options spread that effectively behaves like a zero-coupon […]