Education Archives - Cboe Blogs

  • Trader Talk | Education | Strategy | Trade Ideas | Nov 29, 2016, 11:49 PM

    Dan Passarelli Discusses Getting a Volatility Edge

    Dan Passarelli Discusses Getting a Volatility Edge

    The first presentation at the 2nd Annual Asian version of CBOE’s Risk Management Conference featured an informative tutorial from Dan Passarelli of Market Taker Mentoring.  Dan’s talk was titled Directional Options Strategies and Trade Management. He kicked things off with a quick review of the option greeks and then dove into directional strategies.  He emphasized that trades can start with a directional outlook, but there are other factors that come into play with respect[...]

  • Trader Talk | Education | Oct 5, 2016, 7:02 AM

    59 Years Ago the Russians Won the Space Race - Why Being First is Not Being Best

    59 Years Ago the Russians Won the Space Race - Why Being First is Not Being Best

    Fifty-nine years ago today everyone in the United States was a bit freaked out.  It had nothing to do with the stock market or economy.  It was due to something unseen that was floating over our heads.  The Russians had launched Sputnik, the first artificial satellite to orbit earth.  The Russians had beaten the United States to being the first in space.  The reaction in the US was a combination of fear (does this mean we are behind the Russians militarily as well?) to let’s[...]

  • Market News | Education | Strategy | Election & VIX | Sep 30, 2016, 2:28 PM

    More SPXW and VIX “Election Spread” Expiration Dates for Targeted Strategies

    More SPXW and VIX “Election Spread” Expiration Dates for Targeted Strategies

    As the November 8 date for the U.S. Presidential election approaches, I have heard quite a bit of interest from investors in the use of SPX and VIX options and VIX futures with various expirations over the next six weeks.  Added expiration dates provide investors with the opportunity to implement more targeted buying, selling, hedging and spreading strategies. As shown in the two tables below, a September 28 CBOE Circular, and on cboe.com, by the end of next week there will be SPXW option expirations[...]

  • Market News | Education | Sep 28, 2016, 4:25 AM

    New Paper by Fund Evaluation Group Analyzes CBOE Russell Benchmark Index Suite with Strong Performance by PUTR Index

    New Paper by Fund Evaluation Group Analyzes CBOE Russell Benchmark Index Suite with Strong Performance by PUTR Index

    This week a new paper by Fund Evaluation Group (FEG) --  Evaluating Options For Enhanced Risk-Adjusted Returns: CBOE Russell 2000 Option Benchmark Suite and Case Studies on Fund Use of Options (2016) - was released and presented at the Fifth Annual CBOE Risk Management Conference (RMC) Europe. A link to the new 18-page paper is at www.cboe.com/benchmarks, and below in this blog are 6 of the 30 exhibits in the paper. DESCRIPTIONS OF INDEXES ANALYZED PUTR INDEX HAD HIGHEST GROWTH PUTR[...]

  • VIX | Education | Sep 12, 2016, 10:00 AM

    Market Volatility Does Live

    Market Volatility Does Live

    With respect to the old Christmas folklore story, 'Yes Virginia, there is Volatility'.  The massive move this past Friday was not telegraphed, but then the first big move down hardly ever is.  Nobody rings a bell at the top, nor at the bottom.  Navigating the markets without the proper instruments becomes a very dicey proposition, and certainly with the right tools there is no guarantee of success, certainly with the timing. For instance, the overbought sentiment has been frothy for[...]

  • Market News | Education | Aug 29, 2016, 12:52 PM

    Turn Up the Volume

    Turn Up the Volume

    As we wind down the dog days of summer, the usual complaints are heard daily about markets:  volatility is low, the markets don't move, volume is pathetic, the action is too thin to trade.  Well, I can certainly understand the concern, and with a VIX settling in just under 14% for nearly two months, that is indicative of a sleepy market.  We are trained to believe the markets are vulnerable to downside when participants show complacency, and that has certainly been the case since the[...]

  • Education | Aug 15, 2016, 9:17 AM

    Rate of Change Can Predict Future Momentum

    Rate of Change Can Predict Future Momentum

    The rate of change is defined as the speed for which a variable changes in a specified period of time. We look for a change in trend or just an inflection point key in on the rate of change to help determine where momentum may take place and perhaps estimate the trajectory. While it is often difficult to predict a top or bottom with any consistency, from a mathematical perspective we can use the rate of change to identify probable turning points. It is at these moments where significant gains can[...]

  • VIX | Trader Talk | Education | Trade Ideas | Aug 3, 2016, 11:25 AM

    CBOE Options Institute Class to Focus on VIX and Volatility

    CBOE Options Institute Class to Focus on VIX and Volatility

    The CBOE Options Institute is hosting the first in a series of classes that will focus on different aspects of option and volatility trading. The first class, appropriately named Focus on VIX and Volatility Products, will be held on Friday August 19th at CBOE. For those unable to make it to Chicago the class is also available online. Specific topics to be covered include VIX and the behavior of volatility indexes VIX futures and options price behavior Trading VIX related Exchange Traded Products Long,[...]

  • Trader Talk | Education | Aug 1, 2016, 10:10 AM

    Pulling Yourself Out of a Trading Slump

    Pulling Yourself Out of a Trading Slump

    Trading the market is all about outcomes, and it’s no surprise that we are driven to win every single day. When you’re plugging along and banking some nice wins, all is right with the world. You feel great. You believe in your skills. Your mindset is in a healthy place. The psychology of trading is on your side. We have all been in a trading slump, sometimes thinking that trading each day is a nightmare that will never end.  I've been there, recently in fact.  It was at a certain[...]

  • Trader Talk | Education | Jul 26, 2016, 2:30 AM

    Happy Birthday to Mick Jagger Who Told Us "Time is on our side"

    Happy Birthday to Mick Jagger Who Told Us "Time is on our side"

    Today is the 73rd birthday for Rolling Stones front man Sir Michael Philip ‘Mick’ Jagger.  His accomplishments would take up more space that I have available in this posting, but the statement, “one of the most dominant cultural figures of our time” about sums it up.  One of my favorite Rolling Stones songs is “Time Is on My Side” which I believe is a great statement with respect to potential success trading options.  I always think of that song[...]

  • Trader Talk | Education | Jul 20, 2016, 2:23 PM

    Analysis of an IBM Earnings Trade

    Analysis of an IBM Earnings Trade

    Students from CBOE classes often keep in close touch with us long after they have visited the Options Institute.  I heard from one OI alumnus on Monday who noticed that IBM was set to report earnings after the close. They also had taken a look at the stock price reaction to earnings over the last three years.  On average IBM has moved up or down about 4%, but the majority of those moves had been to the downside.  The thing that stood out for this former student was that the biggest[...]

  • Education | Jul 20, 2016, 7:54 AM

    How Judy Greer Might Suggest Cheryl Tunt Hedge Her Portfolio

    How Judy Greer Might Suggest Cheryl Tunt Hedge Her Portfolio

    I’m using my blogging ability to wish a happy birthday to an American Treasure, Judy Greer.  Greer first caught my eye as the younger sister in the under-appreciated classic Chicago movie, Kissing a Fool.  Many people may remember her as Jennifer Garner's enemy in 13 Going on 30 (I was rooting for Judy's character).  She’s also appeared in many TV shows such as Arrested Development and Two and a Half Men.  My favorite role, however, just uses Judy’s voice as[...]

  • Education | Jul 18, 2016, 4:32 PM

    Hunter S. Thompson Would Suggest Focus in Your Trading

    Hunter S. Thompson Would Suggest Focus in Your Trading

    If he were alive today Hunter S. Thompson would be one year short of becoming an octogenarian and celebrating his 79th birthday.  Anyone who has seen Johnny Depp’s depiction of the ‘gonzo journalist’ in the 1998 movie Fear and Loathing in Las Vegas knows that would be nothing short of a miracle.  What initially made Thompson famous was the book Hell’s Angels:  The Strange and Terrible Saga of the Outlaw Motorcycle Gangs which was published in 1966.  When[...]

  • Technical Analysis & Charts | VIX | Education | Jul 18, 2016, 10:53 AM

    Weekly Market Outlook - A Breakout Amid High Valuations

    Weekly Market Outlook - A Breakout Amid High Valuations

    The market (the S&P 500 anyway) rekindled the rally early last week, finally pushing through the resistance of its May 2015 peak at 2135 to move to a high of 2169. But, it didn't end the week with the same zeal it started it with. In fact, on Friday the index lost a little ground, and logged the first lower low in almost two weeks. A sign that the weight of the 8% gain over the past three weeks and the 16% gain since February has become too much? Possibly. Yet, that doesn't inherently mean[...]

  • Market News | Education | Trade Ideas | Jul 12, 2016, 10:31 AM

    New SPX Monday-Expiring Weeklys Options To Launch Next Month

    New SPX Monday-Expiring Weeklys Options To Launch Next Month

    CBOE recently announced that it plans to list S&P 500® Index (SPX) Monday-expiring Weeklys options, beginning August 15, pending regulatory approval.  With the expected introduction of SPX "Monday Weeklys," CBOE will offer SPX options with Monday, Wednesday and Friday expirations. SPX Weeklys are one of CBOE's fastest-growing products, with volume in 2015 setting a 10th consecutive annual record. The chart below shows that SPX Wednesday-expiring weekly options set new volume[...]