Find Cheap Options for Effective Crash Protection Using Crash Regressions

One way we can quantify a stock’s movement relative to the market index is by calculating its “beta” to the market. To calculate the beta of MSFT to SPY (for example) we: calculate daily MSFT returns and daily SPY returns align the returns with one another regress MSFT returns against SPY returns. This shows the …

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How to Find Cheap Options to Buy and Expensive Options to Sell

james cordier option sellers

If you want to make money trading, you’re going to need a way to identify when an asset is likely to be cheap and when it is likely to be expensive. You want to be a net buyer of the cheap stuff and a net seller of the expensive stuff. Thanks, Capitain Obvious. You’re welcome. …

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How to Hedge a Portfolio with Put Options

There are 2 good reasons to buy put options: because you think they are cheap because you want downside protection. In the latter case, you are looking to use the skewed payoff profile of the put option to protect a portfolio against large downside moves without capping your upside too much. The first requires a …

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