Blog Posts

The Junk Bond/Treasury Convergence Strategy is a fixed-income trading approach that tries to take advantage of: perceived undervaluation within the high-yield (junk) bond market, relative to safer Treasury bonds hedging interest rate risk and profiting from the extra yield from junk bonds’ credit risk   Key Takeaways – Junk Bond/Treasury Convergence Strategy Higher Yield Potential […]

Trading strategy capacity refers to the maximum amount of capital that a particular trading strategy can effectively manage before its performance starts to deteriorate. Each trading strategy has a finite capacity determined by various factors, such as the liquidity of the traded instruments, the breadth of the investment universe, and the frequency of trading signals. […]

In portfolio optimization, the traditional approach has long been Modern Portfolio Theory (MPT), which focuses on constructing portfolios that maximize returns for a given level of risk. However, recent years have seen the emergence of an alternative method that’s come to be known as Hierarchical Risk Parity (HRP). This approach tries to create well-diversified portfolios […]

A diagonal spread in options trading is a strategy that involves simultaneously buying and selling options of the same type (either calls or puts) on the same underlying asset, but with different strike prices and expiration dates. It’s a form of spread trading. The option purchased has a longer expiration date than the option sold. […]

In periods of high market volatility, options strategies can be used to take advantage of or hedge against large price movements. We cover several such strategies in this article.   Key Takeaways – Options Strategies for High Volatility Options Strategies for High Volatility Long Straddle Long Strangle Inverse Iron Condor Modified Butterfly Spread OTM Options […]

A calendar spread is an options trading strategy that involves taking simultaneous long and short positions in options of the same underlying asset but with different expiration dates. The primary goal of a calendar spread is to capitalize on the time decay of options premium, also known as theta decay. A calendar spread can also […]

The concept of leverage involves using borrowed capital for investment and amplifying the potential returns. While leverage can magnify profits, it also magnifies losses. Below we focus on how you can generate leverage in your portfolio, through options, futures, borrowing, shorting, and more.   Key Takeaways – How to Generate Leverage in a Portfolio Leverage […]

When beginning with options trading, it’s important to understand the fundamentals and start with basic strategies that limit risk while providing an opportunity to learn and gain experience.   Key Takeaways – Options Strategies for Beginners Options Strategies for Beginners Buying Calls and Puts Covered Call Protective Put Sell Cash-Secured Put Call and Put Spreads […]

Options trading can be a viable trading strategy for small accounts, but it requires planning and careful risk management. Because small accounts don’t have a lot of wiggle room to trade large premiums or sustain losses, we look at some options strategies for small accounts.   Key Takeaways – Options Strategies for Small Accounts Popular […]

Negative carry is a situation where holding an investment or trade costs you more than the income it generates. This concept is important for investors and traders to understand as it can hugely impact their overall returns and portfolio performance. It’s especially relevant in futures and margin trading, but has various other applications as well. […]