Archive for May, 2010

Option Settlement

This item was filled under [ Traders zone ]

In an options trade, the buyer of the option pays the option price or the option premium. The options seller has to deposit an initial margin with the clearing member as he is exposed to unlimited losses. There are basically three types of settlement in stock option contracts: 1) daily premium settlement, 2) exercise settlement […]

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Developing systematic approach to trade Options

This item was filled under [ How-To ]

Most of the time, new option trader gets lost in the maze of so many option strategies and find it difficult to select right strategy for correct market condition. Let me give you a framework for strategy selection 1) Decide your holding period of the trade – intraday, few days, weeks, till expiry etc 2) […]

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Comparison of “Short Straddle” and “Short Strangle” strategies

This item was filled under [ Option Strategies ]

One of the most popular strategies to enjoy time decay is Short Straddle. Short Strangle strategy has lot of similarity to this. Let’s look at them from different perspective and see the differences:   Hope this helps you in selecting right strategy.  Feel free to express your views by leaving comment below.

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