How are Options Priced? The Black-Scholes Formula

Posted onAugust 2, 2015August 2, 20154 Comments

In the year 1973 Fischer Black and Myron Scholes published their work as a paper “The pricing of options and corporate liabilities” in the Journal of Political Economy. Robert C. Merton published another paper expanding the mathematical understanding of the Read More …

You have the Option to do the Options

Posted onJuly 26, 2015August 10, 2015Leave a comment

With all the different forms of investment available today, it is often not easy for investors to choose the ones that are best suited to them and their needs. However for the savvy investor, the options trading platform is fast Read More …

Options Greeks – It shouldn’t be Greek to Option Traders.

Posted onJuly 19, 2015July 25, 2015Leave a comment

“Options Greeks” are tools that investors use to measure option prices. They use Greek alphabets, Delta, Gamma, Theta, Rho and the exception Vega which isn’t a Greek alphabet. Option Greeks measure aspects of risk associated with holding long (buy) or Read More …

Biases in Investing / Trading

Posted onJuly 12, 2015July 12, 2015Leave a comment

The investor’s chief problem and even his worst enemy is likely to be himself. – Ben Graham. Let us look at some of the behavioral biases that drag down the investment returns. First of, Why do we suffer these behavioral Read More …

Investing or Speculation?

Posted onJuly 4, 2015July 4, 2015Leave a comment

Happy Independence Day! Financial-market participants, knowingly or unknowingly have become speculators. They may not even realize that they are playing a “greater-fool game,” buying over valued securities and expecting – hoping- to find someone, a greater fool, to buy from Read More …

Advanced Option Strategy – Long Iron Condor

Posted onJune 27, 2015June 27, 20154 Comments

Getting aggressive return on investment (ROI) in our self-directed individual retirement account (IRA) is a great enterprising and entertaining way of spending time instead of watching brain-less TV or brain-less chatting on social media. There are 168 hours in a Read More …

The Kelly Criterion. How much do you bet? The Fortune Formula tells it all!

Posted onJune 21, 2015June 21, 2015Leave a comment

The key decision to be made for each successive wager concerns the fraction ‘f’ of one’s current bankroll to place at risk. William Poundstone (Fortune’s Formula: The Untold Story of the Scientific Betting System that Beat the Casinos and Read More …

Option Types: Calls & Puts – NASDAQ.com

Posted onJune 13, 2015June 13, 2015

Before actually discussing options strategies, it is absolutely required to understand the fundamentals as it is the case with our educational system. So here are the fundamentals from the horse’s mouth, the professionals from NASDAQ. Equity options today are hailed Read More …

Leaders are Readers?

Posted onJune 7, 2015Leave a comment

Adages like the “The more you learn the more you earn” and “Readers are not necessarily leaders but leaders are readers” seem to have been validated by some of the successful investors. Here is an excerpt from the book “The Read More …

Selling a Put Option (Short Put)

Posted onMay 30, 2015May 30, 2015Leave a comment

It is an income strategy by collecting a premium upfront, a form of income, where you are obligated to buy the stock at a certain price called the strike price sometime in the future on or before expiration date when Read More …

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