MTM Options Trader Newsletter - How to Use Option Theta in Your Trading

This Week in the Market It was a calm week all things considered with several Nasdaq stocks moving higher despite a mixed bag of economic reports. Nasdaq rallied off its 50-day moving average to join the Dow and S&P 500, which maintained their distance from their moving averages, and all three closed higher. The market is closed on Monday for Memorial Day, which means general implied volatility levels for most options will be lower versus a regular week. Trading volume will most likely be down as well. Speaking of IV levels, the CBOE Market Volatility Index (VIX) has dropped again to levels near its one-year low. Is a market drop expected soon pushing the VIX higher again? Despite the short week, several economic reports are slated for this week, including the latest jobs report with May numbers before the open on Friday. It could be an interesting report with the world trying to come out of this pandemic and economic growth starting to take place. Quarterly earnings continue to be slow with only a handful of notable companies expected to report. Enjoy your Memorial Day and enjoy some time off from trading and investing. Have a great and healthy week!

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How to Use Option Theta in Your Trading Trading options can be a long and frustrating journey without discipline and solid understanding of the option greeks, including option theta, and how to use them in your trading. Most option traders know there is a time component to options. But surprisingly, many do not have a firm grasp of what that really means. Below we will examine option theta so you can feel more confident and make better decisions as an option trader. What Is Option Theta? Option theta measures the rate of decline in the value of an option due to time passing. Continue Reading ... MTM Watchlist Here are a few trade ideas we will likely focus on in group coaching class this week: TSLA – We have looked at several vertical credit spreads both bullish and bearish over the past several weeks. At this point and depending on the open, bull put spreads will be considered again. NIO – Despite closing weak on Friday, a bullish close on Tuesday can trigger additional long calls. GOOGL – The stock rallied up to some potential resistance this past week. Depending on early action this week, call credit spreads just over resistance will be looked at.

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The strategies in this newsletter are for educational and informative purposes only. All information disclosed in this newsletter should not be considered complete in its entirety. Market Taker Mentoring, Inc. will not be held responsible for changes, oversights, errors or omissions. Dates, prices, news and other information may not be accurate. Please verify all information before trading. You alone are responsible for your own investment decisions. Options involve risk and are not suitable for all investors. Before trading options, please read Characteristics and Risks of Standardized Option (ODD), which can be obtained from your broker; by calling (888) OPTIONS; or from The Options Clearing Corp., 125 S. Franklin St., Suite 1200, Chicago, IL 60606. No statement in this newsletter is intended to be a recommendation or solicitation to buy or sell any security or to provide investment or trading advice. Traders and investors considering options should consult a professional tax advisor as to how taxes may affect the outcome of contemplated options transactions. Copyright Market Taker Mentoring, Inc. 2008 - 2021. All rights reserved. Reproducing or redistributing this content is a violation of federal law.

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