In my last article, we traveled to the Greeks and stopped at Port # 1, which was known as Delta. Delta is the most popular and most widely understood of the Greeks.

< ?DART(15);?> The other Greeks are the subject of today's article. We will go thru a brief outline of Gamma, Vega, Theta and Rho. This outline is not meant to provide more than a cursory understanding of these concepts. As time allows, we may address one or more of the Greeks in depth in later articles.

Brief review here, delta represents the amount an option price will change with the movement of stock price. Delta is directional, meaning that trades with a positive delta are bullish, while trades with a negative delta are bearish. Delta also provides a rough estimate of the likelihood that the option will expire in-the-money.

Gamma provides us with the

...

Today we are going to venture into foreign lands, unknown and esoteric places that most of us are only faintly familiar with. Let's take a trip to the Greeks! Greece, that little group of islands in the Mediterranean, has provided the world with some pretty impressive things: mythology, the Olympics, famous thinkers, groovy architecture...and a funky alphabet full of symbols that are applied in various ways around the globe. A handful of these symbols have come to be known in the Options world simply as "The Greeks".

< ?DART(15);?> Delta, Gamma, Vega (which is technically not one of the Greek symbols, but is an old car...go figure?), Theta and Rho are the representations of various aspects of option pricing that we call the Greeks. Each one addresses a particular variable in the movement of an option premium. We will walk thru Delta, the most popular of the

...

The following is an option strategy brought forth by IVolatility.com. I actually use their site to look at IV charts for options. The strategy they are suggesting is a Bullish Call Ratio Backspread and a Short Put on SLW, a silver mining company. The Silver Story In IVolatility Trading Digest™ Volume 9, Issue 32, The Season for Gold, dated August 17, 2009 and then again, in IVolatility Trading Digest™ Volume 9, Issue 33, Seasonal Gold 2.0, dated August 24, 2009 we suggested new positions in the precious metals sector using silver and gold. Since they have both quickly moved up to their previous resistance highs we offer some additional background information and another idea for a potential upside breakout. Gold (cash) at 994.40 is within 12.03 of testing the previous high at 1006.43 made on February 20, ...

by Edward Hugh: Barcelonabr /br /span style="font-family:arial;font-size:78%;"/spana href="http://3.bp.blogspot.com/_ngczZkrw340/SgiAR06lzrI/AAAAAAAAN1E/-NbHseEOV1Q/s1600-h/ecb+one.png"img id="BLOGGER_PHOTO_ID_5334654802370875058" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 399px; CURSOR: hand; HEIGHT: 264px; TEXT-ALIGN: center" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SgiAR06lzrI/AAAAAAAAN1E/-NbHseEOV1Q/s400/ecb+one.png" border="0" //abr /br /blockquote“The 60 billion euros they announced is peanuts for an economy the size of the euro zone,” economics professor and former Bank of England policy maker Willem Buiter said at a conference in Dublin yesterday. “I expect they will announce more or that the recession in the euro zone will be longer and deeper than would otherwise be necessary. They have a record of being somewhat behind the curve.” /blockquoteblockquoteEuropean car sales dropped 12 percent in April.... Bayerische Motoren Werke AG’s registrations dropped by almost one-third to 55,633 even as the German market expanded 19 percent, helped by the government’s 2,500 euro ($3,400) sales bonus .........Spain extended its auto-sales slump with a 46 percent plunge in registrations, the largest among the continent’s ...

There is nothing like a good dose of humor to cheer one up from the otherwise depressing economic situation. The honors go to Norgate Investor Services who compiled the amusing Devil’s Dictionary for Financial Markets. The title was borrowed from Ambrose Bierce’s The Devil’s Dictionary – a great work of diabolical appetites published in 1906.

Enjoy the A to Z of satirical investment definitions.

Analyst recommendations: Strong Buy – Buy Buy – Hold Hold – Sell Sell – It’s too late

Arbitrageurs: large traders who feed on plankton.

Averaging down: lowering the average price of

...

If you know what an iron condor is—which, if you’re reading this, you probably do—you also know that it isn’t the only options strategy out there. It’s worked very well for us, consistently providing close to 10% average monthly returns—but a lot of our subscribers have expressed an interest in, shall we say, a bit more variety. Sure, our bonus trades mix it up a little, but we thought it was time we started talking about other kinds of trades on a regular basis. That’s why we’re introducing Calendar Options. Condor’s Complement So what’s the best way to complement our iron condor positions? We like the idea of profiting no matter which direction the market takes from week to week, especially with so much economic uncertainty out there right now. So we’re going to stick with the delta-neutral theme for our ...

As you probably know Iron Condors are short Vega - which represents your positions sensitivity to shifts in implied volatility. In a relatively low volatility environment this can be troublesome when suddenly volatility spikes and your Iron Condors suffer as a result. So lets say you add some Vega to your portfolio by buying some 4 month calendars (ex: June/October) to hedge against an expected volatility pop. You now have a net Vega position of 100, your Delta is flat and you have some good Theta. The next day the VIX spikes up 2 points on some heavy selling. In theory you should get close to 200 bucks from the pop since you have 100 Vega and volatility went up 2 points. To your suprise your portfolio suffers just as if you had never even added the calendars - in fact it seems they made it worse. So what gives? ...