Understanding options pricing is crucial for traders seeking to navigate the complexities of the market. In this article, we’ll break down key factors like time value, implied volatility, and intrinsic value to help demystify how options are priced. Whether you’re a novice or an experienced trader, grasping these concepts will significantly improve your ability to … Read more
Covered calls are one of the most popular strategies to get steady income in options trading, but most investors do not make the most out of it or even end up making avoidable mistakes. This guide will uncover some key insights into selling covered calls effectively, managing risk, and ensuring your strategy lines up with … Read more
The ultimate goal in trading is to come up with a strategy that would constantly yield profits. However, many traders succumb to the temptation of curve fitting—a practice that fits a strategy perfectly to historical data but fails in live markets. This common pitfall leads to failed trades, wasted time, and emotional distress. Curve fitting … Read more
Short-term momentum versus reversals of large-cap stocks are very controversial and debatable topics within financial research. Traditional theories of momentum and reversals basically explain them as sequential phenomena that take place within different horizons of time. However, they really do not talk about these phenomena being combined within one asset category in comparable periods of … Read more
The RVI is a technical indicator of the momentum of prices by comparing the closing price of an asset to its trading range. It reflects the strength of a trend because it analyzes if the price closes higher or lower than it opens. In an uptrend, for example, prices tend to close higher than they … Read more
The cryptocurrency market is inherently unstable, making navigation for traders and investors impossible. Thus, understanding price behaviors, especially in the aftermath of abnormal returns, can help in strategy formulation to get profitable strategies. The first of its kind groundbreaking study is introducing “Momentum Effects in the Cryptocurrency Market After One-Day Abnormal Returns” by Googly Elmo, … Read more
The stock market is fickle, and finding undervalued stocks with real growth possibilities is not an easy task to accomplish. Companies like Bristol Myers and Meta Platforms have traded in the market below their fair value, while their fundamentals are still pretty solid and their futures show promise. This underperformance has provided a very unique … Read more
Identifying the best growth stocks is not an easy task, especially when firms are trading at a discount or are recovering from very difficult times. However, for investors willing to look beyond short-term volatility, stocks like Dexcom, Intel, and Square, now Block, offer big growth potential. These companies are in a great position to take … Read more
The NASDAQ 100 had a close to a 52-week high but failed to catch up fully; it is lagging technology sector performance. This means that the market is changing, with technology, which has long been a leader, suddenly playing second fiddle to other sectors. Small-cap stocks, in the form of the Russell 2000 (IWM), and … Read more
The Black-Scholes model, initiated in 1973 by Fisher Black, Myron Scholes, and Robert Merton, gave the world its first mathematical basis for modern options pricing. The method takes on all of these key variables—including stock price, strike price, expiration, interest rates, dividends, and implied volatility—to find the theoretical value of an option. However, while this … Read more