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No statement in this web site is to be construed as a recommendation by Trading Options For Income to purchase or sell a security, or to provide investment advice. Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options . Copies of this document may be obtained from your broker, from any exchange on which options are traded or by contacting The Options Clearing Corporation, One North Wacker Dr., Suite 500 Chicago, IL 60606 (1-800-678-4667
Madeira Investments LLC
D/B/A Trading Options For Income
8770 Sunset Drive # 201
Miami, Florida 33143
Tel: 305-432-5066
Fax: 305-279-0532
Copyright © 2008 Trading Options For Income. All rights reserved
Madeira Investments LLC
D/B/A Trading Options For Income
8770 Sunset Drive # 201
Miami, Florida 33143
Tel: 305-432-5066
Fax: 305-279-0532
Copyright © 2008 Trading Options For Income. All rights reserved
Why Trade Iron Condors?
Iron Condors are a great way to trade options. They can be structured to have a high probability of success (80% and even higher) and can yield cash premiums on a monthly basis which is used by many traders as income. These strategies take advantage of time decay and volatility and work very well most of the time and in most market environments.
There are many different types of Iron Condors and many ways to structure these interesting strategies. They can be done on individual stocks as well as ETF's and indices. Our strategies at Trading Options For Income tend to be mostly centered around ETF's on major broad based indices (DIA, SPY, IWM, etc.) and on the Indices themselves (OEX, RUT etc.). Why indices? Well they tend to be less volatile than individual stocks and less prone to single stock events such as earnings announcements and accounting scandals. Another reason is that these instruments tend to be extremely liquid therefore making it easier to adjust and trade in general. Click here to read full article,
How Does Our Service Work?
Trading Options For Income is a subscription based options trading service. We analyze and publish credit spread trading ideas using Index options such as RUT, OEX, SPX and ETF broad based index options such as the DIA, SPY and IWM. Our strategies range from Bull Put and Bear Call directional strategies to market neutral strategies such as Iron Condors and Iron Butterflies.
With our newsletter, you have the ability to have our trade ideas sent to your broker for autotrading, an arrangement where you and your advisor allocate funds to our strategy based on criteria set by you and your broker such as maximum individual trade amount, maximum amount of contracts etc. We are proud to submit our trade ideas to Tradeking, OptionsHouse , Thinkorswim and Optionsxpress, for autotrading purposes. Each of these brokerage firm have slightly different capabilities so please check with your broker to get more info.
What we can't do...
We are not financial advisors. We cannot provide any advice as to whether or not options or our trading ideas are a suitable investments for your particular financial situation. We are in the business of publishing our trade ideas and market analysis only. We highly recommend that our subscribers review their trading allocation with a qualified registered financial advisor/planner. Every one trading or planning to trade options should read the Characteristics and Risks of Standardized Options. A link to this document is posted at the very bottom of this page.
Iron Condors are a great way to trade options. They can be structured to have a high probability of success (80% and even higher) and can yield cash premiums on a monthly basis which is used by many traders as income. These strategies take advantage of time decay and volatility and work very well most of the time and in most market environments.
There are many different types of Iron Condors and many ways to structure these interesting strategies. They can be done on individual stocks as well as ETF's and indices. Our strategies at Trading Options For Income tend to be mostly centered around ETF's on major broad based indices (DIA, SPY, IWM, etc.) and on the Indices themselves (OEX, RUT etc.). Why indices? Well they tend to be less volatile than individual stocks and less prone to single stock events such as earnings announcements and accounting scandals. Another reason is that these instruments tend to be extremely liquid therefore making it easier to adjust and trade in general. Click here to read full article,
How Does Our Service Work?
Trading Options For Income is a subscription based options trading service. We analyze and publish credit spread trading ideas using Index options such as RUT, OEX, SPX and ETF broad based index options such as the DIA, SPY and IWM. Our strategies range from Bull Put and Bear Call directional strategies to market neutral strategies such as Iron Condors and Iron Butterflies.
With our newsletter, you have the ability to have our trade ideas sent to your broker for autotrading, an arrangement where you and your advisor allocate funds to our strategy based on criteria set by you and your broker such as maximum individual trade amount, maximum amount of contracts etc. We are proud to submit our trade ideas to Tradeking, OptionsHouse , Thinkorswim and Optionsxpress, for autotrading purposes. Each of these brokerage firm have slightly different capabilities so please check with your broker to get more info.
What we can't do...
We are not financial advisors. We cannot provide any advice as to whether or not options or our trading ideas are a suitable investments for your particular financial situation. We are in the business of publishing our trade ideas and market analysis only. We highly recommend that our subscribers review their trading allocation with a qualified registered financial advisor/planner. Every one trading or planning to trade options should read the Characteristics and Risks of Standardized Options. A link to this document is posted at the very bottom of this page.
How Are Options Priced?
A question asked by many novice options traders is: How is an options contract priced? Obviously knowing what the value of what you are buying or selling is crucial to a successful trade. The basic model for options pricing today is the Black-Scholes Model developed in 1973 by Fisher Black, Myron Scholes and Robert Merton. The model is widely used today and is regarded as one of the best ways to determine the “fair” price of an options contract. Click here to read full article
When Delta Neutral Isn't Enough!
We have had several inquiries regarding the concept of Delta Neutral options strategies so I wanted to clarify one important aspect of “neutral” trading” that goes overlooked by many options traders. The recent surge in implied volatility has confirmed that constructing Delta neutral strategies really don’t serve the purpose unless the strategy is Gamma neutral as well. Many traders in strategies such as Iron Condors and other neutral strategies don’t quite understand the fact that a position that may start out as delta neutral can quickly take on directional bias ie: directional risk , with large moves in the value of the underlying security or a spike in implied volatility.
Click here to read full article
Theta...The Most Important Greek!
We wrote an article some time last year regarding “Theta” and its impact on our type of strategies. I believe it is worth reviewing again as this important piece of the theoretical options pricing model addresses a very important component in Credit strategies such as Iron Condors and Bull Put/Bear Call spreads. Click here to read full article
Implied Volatility 101
The most misunderstood component of options pricing is implied volatility. Successful options traders understand that implied volatility is the key "ingredient" to making proper trading decisions when buying and selling options and options spreads. Volatility in regards to options is measured two fold. The first and most easily understood is called Historical or Statistical volatility. Statistical volatility simply is the volatility of a financial instrument based on historical returns. Statistical (historical) volatility as the name implies, refers to past actual data.Click here to read full article
A question asked by many novice options traders is: How is an options contract priced? Obviously knowing what the value of what you are buying or selling is crucial to a successful trade. The basic model for options pricing today is the Black-Scholes Model developed in 1973 by Fisher Black, Myron Scholes and Robert Merton. The model is widely used today and is regarded as one of the best ways to determine the “fair” price of an options contract. Click here to read full article
When Delta Neutral Isn't Enough!
We have had several inquiries regarding the concept of Delta Neutral options strategies so I wanted to clarify one important aspect of “neutral” trading” that goes overlooked by many options traders. The recent surge in implied volatility has confirmed that constructing Delta neutral strategies really don’t serve the purpose unless the strategy is Gamma neutral as well. Many traders in strategies such as Iron Condors and other neutral strategies don’t quite understand the fact that a position that may start out as delta neutral can quickly take on directional bias ie: directional risk , with large moves in the value of the underlying security or a spike in implied volatility.
Click here to read full article
Theta...The Most Important Greek!
We wrote an article some time last year regarding “Theta” and its impact on our type of strategies. I believe it is worth reviewing again as this important piece of the theoretical options pricing model addresses a very important component in Credit strategies such as Iron Condors and Bull Put/Bear Call spreads. Click here to read full article
Implied Volatility 101
The most misunderstood component of options pricing is implied volatility. Successful options traders understand that implied volatility is the key "ingredient" to making proper trading decisions when buying and selling options and options spreads. Volatility in regards to options is measured two fold. The first and most easily understood is called Historical or Statistical volatility. Statistical volatility simply is the volatility of a financial instrument based on historical returns. Statistical (historical) volatility as the name implies, refers to past actual data.Click here to read full article
Trading Puts and Calls is our sister newsletter dedicated to directional trading using deep in the money puts and calls. No spreads just individual options using our directional analysis on index ETFs!
Vega, The "Non-Greek" Greek!
Vega is often referred to as the “non-greek” in the options pricing model. Non Greek because Vega is not actually a Greek letter like delta, gamma, theta and rho. In many educational books it is referred to as Kappa instead but for practical purposes and because the trading world refers to it as Vega, we will as well.
Vega represents a measurement of change in options premium relative to a 1% change in implied volatility. As I mentioned before, implied volatility is different from historical or statistical volatility in that it is an indication of a future event which may or may not occur whereas historical volatility is fact. It is important to understand the concept of implied volatility in order to understand vega. Vega takes that subjective “implied” volatility factor and expresses it in real figure that affects the “dollars and cents” of an option. Click here to read full article.
The Fear Indicator...VIX!
The VIX was introduced in 1993 by the Chicago Board Options Exchange (CBOE). The index was originally designed to measure the markets expectation of 30 day volatility of the OEX the S&P 100 index. The index originally measured expectations of implied volatility by evaluating prices on at the money options prices in the OEX and deriving a level of expected volatility. In 2003 the VIX was modified by the CBOE and Goldman Sacks to the broader S&P 500 SPX index. This new formula encompasses a wider range of puts and calls over a wider range of strike prices. The new improved configuration estimates expected 30 day volatility by averaging the weighted prices of near and next term put and call options in the 1st and 2nd contract months. Options used in the calculation must have at least 1 week to expiration and when these near term options reach 1 week to maturity the VIX rolls to the 2nd and 3rd expiration months. Click here to read full article
Vega, The "Non-Greek" Greek!
Vega is often referred to as the “non-greek” in the options pricing model. Non Greek because Vega is not actually a Greek letter like delta, gamma, theta and rho. In many educational books it is referred to as Kappa instead but for practical purposes and because the trading world refers to it as Vega, we will as well.
Vega represents a measurement of change in options premium relative to a 1% change in implied volatility. As I mentioned before, implied volatility is different from historical or statistical volatility in that it is an indication of a future event which may or may not occur whereas historical volatility is fact. It is important to understand the concept of implied volatility in order to understand vega. Vega takes that subjective “implied” volatility factor and expresses it in real figure that affects the “dollars and cents” of an option. Click here to read full article.
The Fear Indicator...VIX!
The VIX was introduced in 1993 by the Chicago Board Options Exchange (CBOE). The index was originally designed to measure the markets expectation of 30 day volatility of the OEX the S&P 100 index. The index originally measured expectations of implied volatility by evaluating prices on at the money options prices in the OEX and deriving a level of expected volatility. In 2003 the VIX was modified by the CBOE and Goldman Sacks to the broader S&P 500 SPX index. This new formula encompasses a wider range of puts and calls over a wider range of strike prices. The new improved configuration estimates expected 30 day volatility by averaging the weighted prices of near and next term put and call options in the 1st and 2nd contract months. Options used in the calculation must have at least 1 week to expiration and when these near term options reach 1 week to maturity the VIX rolls to the 2nd and 3rd expiration months. Click here to read full article
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