Romano RNR·Jul 28, 2022Member-onlyOptions trading part 9: Weighted Vega & trading the term structureThe “weighted Vega exposure” lets us quantify our options position with different maturities into a single figure that reflects our total exposure to implied volatility for our options contracts with different maturities. There are opportunities for volatility traders to trade the term structure. Maturity of an option contract and implied volatility The maturity of an option contract refers…Options Trading8 min readOptions Trading8 min read

Romano RNR·Jun 24, 2022Member-onlyOptions trading part 7: ATM implied vol term structure | ContangoThe ATM implied vol term structure is a measure we can use to evaluate the “implied volatility” of the options contracts across all the different maturities. Nonetheless, let’s start with the fundamentals and define what a contango market is. In a contango market, market participants are more willing to pay…Options Trading13 min readOptions Trading13 min read

Romano RNR·Jun 19, 2022Options trading part 6: practice bonusThis article will be more of a practical article about how we make an options trade decision. This one will be a little more difficult if you have read the previous articles. This article is more of a bonus article that goes into further detail. If this article gets too…Options13 min readOptions13 min read

Romano RNR·Jun 13, 2022Member-onlyOptions trading part 5: Vega/Volatility riskVega, commonly known as the “volatility” of an option contract, is our fourth risk consideration while trading options & delta-hedging. Vega is the options greek that measures the sensitivity of an option’s price to a change in “implied volatility”. In the same way, as option contract values are impacted by…Options Trading18 min readOptions Trading18 min read

Romano RNR·Jun 6, 2022Member-onlyOptions trading part 4: Theta/time decay riskTheta, commonly known as the “time decay” of an option contract, is our third risk consideration while trading options & delta-hedging Theta (Θ) is an important risk to consider when trading options is time decay which is the loss in value of an option contract over time. Understanding “time decay”…Options Trading19 min readOptions Trading19 min read

Romano RNR·May 31, 2022Member-onlyOptions trading part 3: Gamma/curvature riskGamma, often known as the option’s “curvature risk,” is our second risk consideration for trading options and delta hedging with options trading. “Gamma Γ” is the change in “delta” of an option contract for every dollar change in the underlying (i.e., spot). …Options Trading16 min readOptions Trading16 min read

Romano RNR·May 24, 2022Member-onlyOptions trading part 2: delta hedgingA professional options trader/dealer or market maker employs an option strategy to control his profit and loss with the hope of gaining a “theoretical edge.” The “theoretical edge” is the amount of predicted profit based on analyzing current market circumstances and numerous risk variables. There are numerous different risk considerations. …Options Trading21 min readOptions Trading21 min read

Romano RNR·May 17, 2022Member-onlyOptions tradingThe appeal of options trading is the “leverage” they provide. Since 1 option contract controls 100 shares of the underlying asset, buying a call option contract exposes the gains and losses of 100 shares at a fraction of the price of 100 shares. In this article, we will cover option…Options Trading42 min readOptions Trading42 min read