In 2016, I read a new story that I thought would make a great trade idea. It seems that Lumber Liquidators had been publicly smeared by the mainstream program 60 Minutes. They claimed that Lumber Liquidators had distributed “cancer-causing” (!) floor materials. The stock was trading around $14, down from a high of around $120 two years prior. The State of California was setting its...
I keep hearing from people that “DITM options are the same as stock”. While this statement is true with respect to the two parameters of “extrinsic value” and “delta”, DITM options have an incredibly different risk profile than stock and can be extremely useful tools. In this post, I’ll demonstrate this. Or rather, I’ll show you...
All, I wanted to post an example of how I like to trade futures options. I like to be long gamma, near expiration, where a relatively small move in the underlying instrument translates to big moves in the options price. Note that here I closed out the positions where there was nothing but time premium left. Returns for each trade were 400% win, 1,000% win and a 100% loss (with a...