We Get Asked These 5 Questions about Options the Most
By - Dan Raju, Tradier CEO on Apr 12, 2021 at 4:10:18 PM

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Whether you’re new to investing or hoping to grow your portfolio, you need a good understanding of how trading works. Most people start by purchasing stocks and bonds. However, options trading can be an excellent way to grow your wealth with less risk.

Options trading can be confusing at first. Here are some common questions about this form of investing and its advantages over traditional trading.

Are options riskier than stocks?

No. With proper education, options can actually be less risky than stocks. When you buy a stock, you often place a stop-loss order to minimize your loss if the value drops. The problem is, if this happens, you still sell at a loss.

By contrast, options do not create an obligation to sell or buy. Instead, they have pre-defined strikes and expiration dates. You pay for the option to call (buy at a predetermined price) or put (sell at a predetermined price). As long as you act before the contract expires, you can often minimize losses if the stock’s value plummets — or lock in a good price before it skyrockets.

In short, buying an option is only as risky as the price you pay for it. And often the cost of an options contract is less than a straightforward purchase of shares, as we’ll discuss in the next question.

Can you get more leverage trading options than trading stocks?

Yes. Each option you purchase controls 100 shares of the underlying stock. This means you can improve your trading position without tying up as much of your funds.

Let’s take an example: suppose you purchase 1 XYZ option for $5.00. In option-speak, this value is multiplied by $100 to come up with a total of $500. You’ve now created an opportunity to strike at that price, as long as you call before your contract expires.

Now, let’s say that XYZ stock is trading for $50 per share. Buying 100 shares of XYZ for $50 would cost you $5,000 — 10x more than the option price in this example. As you see, this gives you wiggle room in the market and allows you to gain a strategic advantage without putting up as much money.

Options seem difficult to learn. How do I learn how to trade options?

Options can seem overwhelming at first, but a little education goes a long way. Search the web for an options mentor or educator — there are many. Learn the basics first, and take time to research the stocks you’re interested in. Options trading requires you to do your homework.

Then, set yourself up with a paper trading account with TradeHawk by Tradier and practice, practice, practice!

What are the most important Greeks to learn and understand?

In options trading, Greeks are the variables used to describe the risk of an option or an entire portfolio based on the underlying stock price movement, time, volatility, interest rate changes, etc. Most options traders initially focus on deltas and theta.

Delta is the rate of change of the option based on a $1.00 move of the underlying stock. For example, if you owned a 50-delta call option in XYZ stock, and XYZ stock moved up $1.00, you would expect this call option to move up by $.50. (Option traders refer to deltas as whole numbers, but mathematically, a 50 delta is actually .50 or 50% of 1.00.)

Theta represents how much an option will “decay” over a day. Options are considered “wasting assets,” i.e., they inevitably get cheaper with time. Theta represents the diminishing value as the option nears its expiration.

For example, if you have a position that has -$200.00 theta, this value means that you can expect your position to lose $200 per day, assuming nothing happens to the underlying price action of the stock. A negative theta may sound scary, but some traders take advantage of this by waiting for the call option to decline in value. When this happens, they can sell their options and capture a profit.

What does assignment mean in options?

Assignment means that an option has converted (or assigned) to the underlying asset, and the stock now belongs to the options trader. Note that you’re never obligated to exercise an option. Instead, you can choose to either take action or let the option expire.

For call options, assignment happens when the contract expires and the stock price is greater than the strike price. This is called being “in the money.” By contrast, if the stock price is less than the strike price, the option expires worthless and the asset will not be assigned.

For put options, the opposite scenario applies. Assignment happens at expiration when the stock price is less than the strike price. If the stock price is more than the strike price, then the option expires worthless.

When options expire at least $.01 in the money, the exercise and assignment of the option is automatic. (Remember, each 1 lot of options represents 100 shares of the underlying asset.) Holders of call options will receive 100 shares of the underlying stock for every 1 option owned. Conversely, if you are short a call option that is assigned, you will receive 100 shares of short stock.

For puts, holders of long options that expire in the money will receive 100 shares of short stock. Those who placed short put options will receive 100 shares of long stock at expiration if the option is in the money.

The Bottom Line

Contrary to popular belief, options trading is no riskier than any other sort of investing. In fact, the flexibility it offers can help savvy investors reduce their risk. Options trading also provides an opportunity to trade with greater cost-efficiency and strategic advantage. If you are looking to gain profits from a growing stock, diversify your portfolio with less risk, or speculate on new stocks, options trading is a great choice.

Get started with Tradier’s TradeHawk, a powerful options trading platform designed by investing experts. 


Market Report New Highs Dow and S+P
By Todd Horwitz on Apr 11, 2021 at 6:16:04 AM

Market Report New Highs Dow and S+P

By

 

Todd Horwitz Chief Strategist BubbaTrading.com

Be Prepared not Surprised.

After a brief pause a few weeks ago the Dow and S+P have made all time new highs while the Nasdaq is closing in, The Russell which has once again become the laggard looks primed and ready to join the party.

The cheap money continues to fuel the markets which has been driven by the minority on light volume. The sellers have stepped away letting the bulls have their way. The only real worry in these markets are the Bond markets who continue to insist that rates are too low.

Although the FED refuses to acknowledge that inflation exists their continued expansion of the money supply keeps the buyers flowing and the money cheap. There will be a point and time when markets recognize the underlying issues including record margin debt.

The options markets remain bullish in fact this may be the most positive they have been since the bull market began a year ago. 4 of the top 5 strategies are bullish with long calls taking the top spot for the 20th week in a row.

The top five bullish symbols are all tech AAPL, SQ, QQQ, TSLA and MSFT obviously relayed in the big move in the Nasdaq. Bears have moved back to TLT, SPX, XLU, CVX and FXI showing us the risk on environment.

Adding in a falling VIX and it’s apparently the Bulls are the strong hands, and the rally should continue to roll. However, there is a saying that “complacency is the architecture of our downfall”. For now, it looks like we rally on.

Todd “Bubba” Horwitz

BubbaTrading.com


The Beginner's Guide to Trading vs. Investing
By - Dan Raju, Tradier CEO on Apr 5, 2021 at 12:31:07 PM

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In the past year there has been a surge of interest in trading and investing. People have had more time on their hands due to the COVID-19 pandemic, and there is greater access to the markets than ever before thanks to technologies that eliminate the need for the four walls of the traditional brokerage firm. 

If you find yourself debating where to begin, it is important to know that there are many differences between trading and investing. They require different approaches and suit different people’s lifestyles and needs. Read ahead and learn which type might be right for you, especially as a beginner in the markets, as well as common misconceptions to avoid.

Swing Trading

The two most common types of trading are swing trading and day trading. Individuals who trade on “swings” within the market try to identify opportunities where they feel a stock is critically under or overvalued and strike when the time is right. They pay attention to momentum indicators and trends over a period of time ranging from a few days to a few weeks.

Since swing trades can take a few weeks to develop before the trader dumps the stock, traders have some breathing room. For this reason, swing trading is a part-time job and highly suitable for those with a full-time job who are looking for a side hustle. 

Day Trading 

Day traders work on a shorter timetable than swing traders. Day traders make trades that can develop over a few hours or—at most—up to a day. Because they rely on short-term buy and sell signals, they are glued to their screens and trade at a high rate over the course of the market’s open.

A day trader usually won’t keep any securities or positions overnight, and many traders incur losses over their first few months. Becoming well-versed in day trading requires a lot of time and dedication, and those who go into day trading typically seek to make it a full-time job. 

Investing 

Investors aim to build their wealth gradually over the course of years, even decades. They buy and sell a variety of stocks, mutual funds, and stock bundles through sources such as ETFs. Investors often reinvest their profits and rely on slower methods of wealth building, such as dividends from stocks they own over a long period of time. Common types of investing include putting money into a 401(k) or an IRA.

Investors pay attention to market indicators that signal a company’s value, such as the company’s management forecast and price-earnings ratio. A benefit of investing is that investors don’t have to track their investments day-to-day; they just have to make sure they are making steady growth over a substantial amount of time. When a downtrend occurs in the market, investors can usually ride it out and expect to recover their losses when the prices rebound.

Avoid These Misconceptions

The biggest misconceptions are that 1) trading is easy, and 2) traders can easily be successful from day one. As with anything, the key to being successful in trading and investing is to have a solid plan and stick to it. Trading requires that you dedicate time, energy, and discipline to studying the markets and reacting accordingly. Day trading is especially immersive, and it’s important to strategize a day-trading plan that works for you and avoid straying from it. 

Which Type Is the Best? 

Another misconception is that there is a right or wrong answer to this question. In reality, what works best for you will depend on your lifestyle and expectations.

For those entering the markets as a beginner, investing is a great option since it has the longest time horizon. There is time to learn the markets and investing is generally low-risk and reliable. 

Trading is more suitable for those who seek quicker gratification. If you’re yearning to make a full-time job out of trading, day trading is more aligned with your interests. If you want a more casual approach, you might find that swing trading is your best bet. 

Seasoned Traders and Investors Do This

Successful traders and investors will tell you that sticking to a tried-and-true plan over a substantial amount of time is important regardless of whether you go into trading or investing. No matter what you choose, it always pays to be strategic and level-headed. 

Don’t go at it alone! If you’re thinking about trading, gain some more insight into the specific habits seasoned traders utilize: https://blog.tradier.com/2021/02/five-essential-habits-seasoned-traders-build.html


Market Report Interesting, Diverging Markets
By Todd Horwitz on Mar 28, 2021 at 6:19:41 PM

 Market Report: Interesting, Diverging Markets

By

 

Todd Horwitz Chief Strategist BubbaTrading.com

Be Prepared not Surprised.

The wild and crazy markets roll on. Major divergences have become a regular occurrence. Last week saw the Dow and S+P make new closing highs, while the Russell and Nasdaq closed lower for the week. That tells a story of uncertainty.

We are witnessing the power of the FED and cheap money policies. While the FED blows up the money supply, they maintain their stance of no inflation. If you have been to the gas station or grocery store recently the inflation data is laughable. Of course, it appears the FED continues to use antiquated models.

One thing we must remember, don’t fight the tape or trend. Until further notice the trend appears higher and is being backed up by the options being traded. Call buying remains in the leadership role followed by bull put spreads and put selling. In other words, it looks like the bulls are still in charge.

The bullish symbols continue to rotate with this week’s leaders, IWM, FB, BA, AAPL and the continuation of GME and DKNG. There are a few new names on the bear side as well with the SPY leading the way followed buy AMD, AMZN, XLU and MCD.

There are many things that don’t make sense but trying to navigate or predict the end of a bubble are impossible. Stay with the trend until it changes. If you try and trade the news, you lose.

Every Monday we do a strategy call. This week the call starts at 4:30 EST.  Use the link below to register 

2021-03-29 Monday Night Strategy Call 

Todd “Bubba” Horwitz

BubbaTrading.com


Market Report: Markets in Tenuous Uptrend
By Todd Horwitz on Mar 21, 2021 at 11:39:22 AM

 Market Report: Markets in Tenuous Uptrend

By

 

Todd Horwitz Chief Strategist BubbaTrading.com

Be Prepared not Surprised.

Markets have been in a wicked consolidation pattern with a bias to the upside. This move is tenuous at best. The price action is not a bullish as it has been, but the trend is the trend. Traders learn not to fight the tape or the trend no matter how bad it looks.

It appears that the FED is starting to panic as the markets get away from them. On Friday morning the FED stopped the (SLR) supplementary leverage ratio for banks. The lending policies have been the main source of the rally which is looking more and more like a bubble.

Amazingly the options strategies leaders are bullish or at least appear that way. One thing we always want to remember is things may not be as they appear. With the number one strategy being call buying those who are short could be covering up their short positions creating a synthetic put. There has been a little more bearish activity with some put buying, however the VIX is dropping.

As you can see, the markets are confused as well as the traders. The only thing that remains constant is the options strategies being used. The bullish symbols have changed again with GME on top, followed by AAPL. SPY, PLTR and BA. Bearish leaders are FXI, VXX, DASH, AMD and CVX.

To sum everything up, markets are on edge and can move either way. Confusion is everywhere which is the pure definition of consolidation and uncertainty. Eventually there will be a big move and we will be ready.

Todd “Bubba” Horwitz

BubbaTrading.com


TRADIER ANNOUNCES THE ACQUISITION OF POPULAR COMMISSION FREE MOBILE TRADING APP RHO
By - Dan Raju, Tradier CEO on Mar 18, 2021 at 12:28:38 PM

Leading Online Broker that offers the widely used "Brokerage in a Box" API for trading platforms and digital advisors acquires Rho to enhance its white label product offering.

 

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Charlotte, North Carolina – March 18, 2021- Tradier, a leading online broker and provider of the widely used "Brokerage in a Box" API for trading platforms, advisors, developers, and individual investors, today announced the acquisition of Rho( https://www.rho.trade/), a popular active trading mobile app that made a name for itself with its simplified onboarding and commission-free trading interface. As part of the acquisition, Rho's technology and customers will be integrated into Tradier's products. Existing and new clients will have access to a next-generation white-label mobile offering. 

Houston-based Rho was founded in 2018 as a commission-free app for investing in stocks, ETFs, equity options, and index options. The Rho mobile platform has gained a sizable market presence over the years due to its ability to not only serve first-time traders but also empower traders who look for more advanced features than trading apps like Robinhood. Rho's founder Andre Norman and his team have built an intuitive and robust platform from the ground up, and the Rho IP includes innovative workflows that can give retail investors a trading edge. Andrew Norman will be joining the Tradier management team as SVP of Growth. The acquisition is intended to unleash a powerful commission-free white-label mobile experience to existing Tradier clients and new partners, including large social brands looking to offer embeddable investing capabilities. 

"While API-based investing integrations are at a record high, there is a mounting demand for pre-built embeddable, mobile platforms for quick launch from clients," said Dan Raju, CEO of Tradier. "The pandemic has accelerated retail trade volumes and adoption of mobile by active traders. New and existing companies are all looking to offer commission-free mobile platforms or nested investment capabilities within their apps in mass numbers. We believe this acquisition will enable the distribution of Rho's signature platform to a large audience to match Rho Financial's original mission."

"Tradier has served Rho as a Brokerage Partner for years. We are excited to continue on our mission to democratize commission-free mobile experiences as a part of the Tradier team," said Andre Norman, Founder, and CEO of Rho. "Together with Tradier, we look forward to continuing to change the way brokerage services are delivered and consumed by Traders." 

For more information, please contact sales@tradier.com 

###

About Tradier

Tradier’s Brokerage platform and API’s enable entrepreneurs, businesses, developers to rapidly create and offer embeddable investing to investor platforms, digital advisors and global firms who want to get access to the US Markets. Created by longtime tech developers, Tradier's APIs power third-party firms and developers to offer trading in all US listed securities and build research, analysis, web, social and mobile experiences as self-directed or digital advice(robo) platforms.

About Tradier Brokerage Inc.

Tradier Brokerage, Inc. — a member FINRA and SIPC is an independent subsidiary of Tradier, Inc. Tradier Brokerage with its web, mobile, desktop and API platforms enables online investing and advanced trading for active traders, advisors and platform partners globally at simple and competitive prices.


Tiblio partners with Tradier to bring powerful tools, thoughtful education, and no per-trade or per-contract execution fees
By - Dan Raju, Tradier CEO on Mar 15, 2021 at 10:32:54 AM

Charlotte, North Carolina – March 9, 2021 — Tiblio, in partnership with Tradier, is pleased to announce the launch of the integration to provide the rapidly growing retail options trading market with an intuitive combination of education, community, cost savings, and powerful tools. Traders who subscribe to Tiblio have access to proprietary, pre-built and configured option screeners for long calls, long puts and vertical credit spreads screeners built with traders in mind. In addition to this Tiblio users have unlimited commission-free options trading from Tradier Brokerage. The collaboration with Tradier aligns with Tiblio's mission to democratize access to the booming retail options market while empowering traders to be successful.

Over the last two years, retail options trading has become a dominant force in the markets' trends and reactions. Existing retail traders are adopting options as a primary investment instrument, and millions of new first-time investors are starting their online investing with options. This has created a massive demand in the market for pro-level options screeners and educational tools. Tiblio plans to address this demand with its innovative platform and partnership with Tradier.

"Tiblio was created by successful traders that have been through this journey and understand what traders need and the support they aspire to have. Today, Tradier is the home for some of the most advanced active traders in the market with its powerful execution, great technology API, and a brokerage stack built to support our mission of retail enablement." said Leon Smith, CEO/Partner at Tiblio Inc.

"Tradier is proud to partner with innovative companies and a great platform like Tiblio that are bringing measurable value to online retail investors," said Dan Raju, Co-founder and CEO of Tradier. "Together, we are changing the way retail investment is delivered, where retail traders have access to great platform alternatives and better capabilities than the existing vertical offerings in the market."

About Tiblio, Inc.

Tiblio is a rapidly growing empowered community that has access to thoughtful investment tools that provide an edge to investors and an ever-expanding digital educational library for active options traders. Tiblio screens the options market for credit spreads, naked puts, long calls and more. Tiblio monitors market moves, daily, and alerts you to options price changes. Tiblio also offers a Trade Log to track your trades and measure performance over time.

About Tradier Brokerage Inc.

Tradier Brokerage, Inc. — a member FINRA and SIPC is an independent subsidiary of Tradier, Inc. The Brokerage API enables entrepreneurs, businesses, developers and active traders to solve their trading and brokerage challenges using independent content and tool providers of their choice — at simple and competitive prices.

About Tradier, Inc.

Tradier, Inc. is a cloud-based financial services provider and brokerage API company that offers a groundbreaking platform to serve Platform Providers, Advisors, Developers and Individual Investors. Tradier delivers an innovative set of fully hosted API's, modules and "out of the box" tools that are leveraged by a growing list of providers seeking to create innovative trading and investing experiences.

Created by developers, Tradier is a technology linchpin that works with organizations that want to democratize access to data, trade execution, low cost trading and market connectivity through cloud access. In addition, Tradier's APIs empowers third-party developers to build applications such as algorithmic and robotic trading systems.

The Tradier solution features REST-based and Streaming APIs, and turnkey tools that deliver speed, choice and simplicity – all on a secure platform.

Contacts:

Media Relations:
press@tradier.com


Market Report Markets Battle Nasdaq Looks Weak
By Todd Horwitz on Mar 15, 2021 at 2:46:27 AM

 Market Report: Markets Battle Nasdaq Looks Weak

By

 

Todd Horwitz Chief Strategist BubbaTrading.com

Be Prepared not Surprised.

As we look at the action last week market trends looked like they were shifting. There seemed to be a real possibility that the bull market was over. However, Tuesday started another rally taking the Dow and Russell to new highs while the S+P was close. However, the Nasdaq was weak and could have been a lower high, meaning lower prices are ahead.

We do not predict markets; we react and watch the price action. There have been many mixed signals including lousy volume on the big rallies last week. There are many factors and a case can be made for the bulls as well as the bears. The price action will lead the way. Those who try to predict what is next are usually wondering why they lost their money.

The options continue to signal more bullish action ahead, for the 20th week in a row call buying has led the way. The rest of the top five strategies are mixed between bullish and bearish. However, one important thing to remember, trades are made for various reasons. The long call buys could be covering up shorts, this is what makes the price action so important.

The bullish symbols continue to repeat with this week being no different. The leaders this week were GME, TSLA, DKNG, BA and SQ. The bear side is definitive with the SPY, SPX, XLF, XLE and XOM. Those are all S+P or oil stocks, which can lead to a sell off. It is certain to be an interesting week. We will be ready to react to what the market offers.

Todd “Bubba” Horwitz

BubbaTrading.com


The Neglected Bunch: What the Most Active, Successful Traders Look for in a Trading Platform
By - Dan Raju, Tradier CEO on Mar 12, 2021 at 11:26:29 AM

Article on NASDAQ by Dan Raju, CEO of Tradier

  The last five years have seen a massive disruption in how brokerage services are being delivered and consumed. We have seen the entry of 10 million new aspiring investors who want to try, invest and gain stock market access. Commission-free apps for new retail participants have been a central focus of the brokerage industry over the last 24 months. While these platform’s monetization models have been a focus of the conversation, what is abundantly clear is the success of the brokerage firms in attracting these new retail investors with their free apps and free stock incentives. The users of these apps trade an average of 0-3 times a month and carry less than $1000 of cash and positional value in their accounts.

 
 In all the focus on new retail investors, the industry has overlooked the “Active Retail Trader” who trades an average of 10 plus times a month. Unfortunately, this segment gets no attention or focus more recently. This segment is responsible for 80% of the volume and 75% of the revenue that this industry generates. These active traders look for a different set of features and have different sensitivities than the first-time investor. I recently spoke to some of the CEOs of client firms who offer active trading platforms, and I found some remarkably interesting things that we all might need to pause and take notice of.

Prefer Better Execution Over Commission: While this segment is happy to get commission-free trading, they want good fills and best execution. When your trade is valued at thousands of dollars, a few dollars of savings on commissions is not a top priority. They want transparent best execution. Subscription-based pricing seems to be the right balance and extremely popular among active traders. This model gives the active trader, quality execution and caps their commission spend. We see active traders choosing subscription-based services in droves.

Better Real-Time Data: For Active Traders, data is vital. These traders are active all day looking and acting on prices. They need real-time data at their fingertips. They need all their tools to be powered by real-time data. Delayed data will just not cut it for them. They are looking for advanced Level 1 and Level 2 streams of real-time market data rather than fundamental prices.

This Active Trader Group Has Become Options Centric: Most of the active trader segment executes options and in most cases its more than 50% of their volume. The volatile markets of 2020 along with the remote worker environment due to the pandemic has contributed to active trading and specifically active options trading in a big way. They are constantly looking to connect, collaborate and get better at their options trading skills.

Best Tools: They are tool hungry and are looking for an edge. Advanced Charts are in great demand. Risk Analysis tools are also extremely popular. They are looking for risk analysis tools for options, spreads, strategies, and overall positions. They crave trade simulation and back testing. They want to have a good grip on both implied and historical volatility and will crave to price options across different expirations. Support for Advanced Orders is also high. Being able to trigger and schedule future orders intuitively and manage their exits is in great demand. This massive interest from traders has led to the growth and launch of hundreds of such comprehensive platforms.

Education and Mentorship: Active Traders love education and ongoing mentorship This education typically fuels their trading fire. They are constantly on the lookout for great content, virtual trading rooms and educational courses. What we found is that the majority of active traders either subscribe to an educator, content provider or attend or engage with a trading room or a community of some sort. Many educators are offering their own trading platforms and becoming one-stop-shops for Education, Community and Education.

 

Market Report Indexes and Metals turn Ugly
By Todd Horwitz on Mar 8, 2021 at 6:09:58 AM

 Market Report Indexes and Metals turn Ugly

By

 

Todd Horwitz Chief Strategist BubbaTrading.com

Be Prepared not Surprised.

It has been a long time since the major indexes have looked this bad. We have seen a trend reversal in all indexes except for the Dow futures. Bonds continue to be ugly sending the FED a message to quit with the QE and let interest rates rise. Metals have fallen under heavy pressure, in other words where are the safety plays.

The big question here: Is the Bull Market over? There is no real answer to that now, we can say the trend is lower and the possibility that it is over exists. However, the past 10 weeks the number one option strategy has been call buying which on its bullish. You must remember, we don’t know the reason for the call buying, it could be to create a synthetic put or cover up dome shorts.

As we look at the top 10 list of option strategies used last week, after number 1 call buying the next four are bearish, bear calls, long puts, bear call spreads indicting more of a bearish tone. However, the price action will confirm.

The bull symbols trading are still in tech, AAPL, DKNG, SQ and PYPL lead the way. The bearish side is a potpourri of SPY, QQQ, NUGT, XSP and SNDL. There are many things in play here with warning signs galore, is the bull market over

Patience and discipline are always the best strategies.

Todd “Bubba” Horwitz

BubbaTrading.com



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