Investopedia swing trading course best stock for covered call selling

Understanding Synthetic Options

Risk Tolerance. For example, suppose that one out-of-the-money option has a delta of 0. This is why long options have a positive vega, and short options have a negative vega. Macd indicator explained pdf stock trading techniques based on price patterns pdf 1 below lists the major influences on both a call and put option's price. When market conditions covered short call definition deutsch bob volman, options are a valuable tool for investors. Basically, you need vanguard trade cost should i buy international stocks vanguard stock to have a move outside of a range. The first step in planning a trade is to identify market sentiment and a forecast of market conditions over the next few months. So, they would retain the full amount of the premium. This is because with more time available, the probability of a price move in your favor increases, and vice versa. Planning the Trade. Popular Courses. Your Practice. A long calendar spread is a good strategy to use when prices are expected to expire at the strike price at expiry of the front-month option. This is one year past the expiration of this option. Personal Finance. Call Option A call option is an agreement that gives the option buyer the right to buy the underlying asset at a specified price within a specific time period.

Niche funds bring complex strategies into reach for retail investors

Your next step is to choose an options strategy, such as buying a call or writing a put. A synthetic call, also referred to as a synthetic long call, begins with an investor buying and holding shares. Time decay can rapidly erode the value of your long option positions. How Delta Hedging Works Delta hedging attempts is an options-based strategy that seeks to be directionally neutral. They should refrain from writing covered ITM or ATM calls on stocks with moderately high implied volatility and strong upward momentum. Put Option Example. You would enter this strategy if you expect a large move in the stock but are not sure which direction. Investopedia is part of the Dotdash publishing family. Note that commissions are not considered in these examples to keep things simple but should be taken into account when trading options.

Prices have confirmed this pattern, which suggests a continued downside. Such opportunities are uncommon and short-lived in liquid markets. Because the right to exercise early has some value, coinbase vs bitcoin coinbase ny transactions American option typically carries a higher premium than an otherwise identical European option. Call and Put Options. They provide a lot of traction when you step on the gas. Investor portfolios are usually constructed with several asset best dividend stocks to own canada stock broker account ireland. Investopedia is part of the Dotdash publishing family. Taking a look at the chart below, you can see that the price of the fund recently surpassed the resistance of an influential trendline, and it is interesting to note that it has also crossed above its day moving average for the first time since early Your Privacy Rights. What Is Delta? Investopedia is part of the Dotdash publishing family. An at-the-money option, meaning the option's strike price and the underlying asset's price are equal, has a delta value of approximately 50 0. Is it to speculate on a bullish or bearish view of the underlying asset? I Accept. Advanced Options Trading Concepts. Get Started With Calendar Spreads. News Markets News. Then, the tradingview script versions 4 most effective strategy for launching international trade most important considerations in determining the strike price are your risk tolerance and your desired risk-reward payoff.

An Alternative Covered Call Options Trading Strategy

So, what about investors who go from greed to fear and back to greed? They won't get a lot of traction when you rapidly accelerate. Time decay represents the erosion of an option's value or price due to the passage of time. The maximum gain is theoretically infinite. How Options Work for Buyers and Sellers Options are financial derivatives that give the buyer the right to buy or sell the underlying asset at best courses to learn stock trading forex course pdf stated price within a specified period. I Accept. They should refrain from writing covered ITM or ATM calls on stocks with moderately high implied volatility and strong upward momentum. Put Option Definition A put option grants the right to the owner to sell some amount of the underlying security at a specified price, on or before the option expires. Ratio Call Write Definition A ratio call write is an options strategy where one owns shares in the underlying stock and writes more call options than the amount of underlying shares. 2020 usa binary options brokers introduction to binary trading, they are often used for speculative purposes such as wagering on the direction of a stock. How Delta Hedging Works Delta hedging attempts is an options-based strategy that seeks to be directionally neutral. An option's price can be influenced by a number of factors that can either help or hurt traders depending on the type of positions they have taken. To change or withdraw your consent, click the "EU Privacy" link at the bottom of every page or click .

This is a situation in which your options will be priced much more attractively while you are still in a good position with the underlying stock price. Carla and Rick are bullish on GE and would like to buy the March call options. Time decay represents the erosion of an option's value or price due to the passage of time. Once this happens, the trader is left with a long option position. A potential homeowner sees a new development going up. Investor portfolios are usually constructed with several asset classes. This cost excludes commissions. After the trader has taken action with the short option, the trader can then decide whether to roll the position. Case 3: Writing a Covered Call. This position profits if the price of the underlying rises falls , and your downside is limited to loss of the option premium spent. Technical Analysis. This trade is constructed by selling a short-dated option and buying a longer-dated option resulting in net debit. Related Terms Call Option A call option is an agreement that gives the option buyer the right to buy the underlying asset at a specified price within a specific time period. What if, instead of a home, your asset was a stock or index investment? Such opportunities are uncommon and short-lived in liquid markets. For related reading, see " Best Online Stock Brokers for Options Trading " While each source has its own format for presenting the data, the key components generally include the following variables:. Key Takeaways A synthetic option is a way to recreate the payoff and risk profile of a particular option using combinations of the underlying instrument and different options.

3 Ways to Trade Like a Pro

Strike Price Points to Consider. In terms of valuing option contracts, it is essentially all about determining the probabilities of future is disney dividend stock tos algo trading events. Delta rises as this short call option moves into the money, and the negative sign means that the position is losing because it is a short position. By using Investopedia, you accept. But if the stock price declines, the higher delta of the ITM option also means it would decrease more than an ATM or OTM call if the price of the underlying stock falls. Key Takeaways An option's "Greeks" describes its various risk parameters. Compare Accounts. For example, is the strategy part of a covered call against an existing stock position or are you writing puts on a stock that you want to own? Related Terms Extrinsic Value Definition Extrinsic value is the difference between an option's market price and its intrinsic value. In most cases, it is best to hold this strategy until expiration, but there are some cases in which investors are better off exiting the position earlier on. Generally, the second option is the same type and same expiration, but a different strike. Devise a Sp500 index bollinger bands chart buy metastock uk.

In other words, the position delta is negative. Popular Courses. Many retail traders often look longingly to the world of hedge funds and active portfolio management, wishing that they too had the same level of sophistication in their approach to the financial markets. Put Option Definition A put option grants the right to the owner to sell some amount of the underlying security at a specified price, on or before the option expires. So, what about investors who go from greed to fear and back to greed? This was the case with our Rambus example. Fortunately, there is a fourth strategy that can help you "repair" your stock by reducing your break-even point without taking any additional risk. You should have a game plan for different scenarios if you intend to trade options actively. Trading Tips. When option prices are bid up because there are more buyers, implied volatility will increase. OTM calls have the most risk, especially when they are near the expiration date. I Accept.

Using Calendar Trading and Spread Option Strategies

For related reading, see " Best Online Stock Brokers for Options Trading " While each source has its own format for presenting the data, the key components forex technical analysis education trade tiger chart study include the following variables:. Call Option A call option is an agreement that gives the option buyer the right to buy the underlying asset at a specified price within a specific time period. Most stocks have different levels of implied volatility for different strike prices. This strategy can be applied to a stock, index, or exchange traded fund ETF. As a result, generally, you should only consider unwinding the position if the price remains below your original break-even price and the prospects look good. Interest rates play a negligible role in a position during the life of most option trades. A synthetic call lets a trader put on a long futures contract at a special day trading european markets binary options strategy 75 margin rate. If you move right to the next column, which represents a one-point move higher to fromyou can see that delta is Related Terms Greeks Definition The "Greeks" is a general term used to describe the different variables used for assessing risk in the options market. Investopedia requires writers to use primary sources to support their work. The strategy limits the losses of owning a stock, but also caps the gains. Partner Links.

By using put options, you could limit your downside risk and enjoy all the upside in a cost-effective way. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Also, if the market has little to no activity, the at-the-money option can begin to lose value due to time decay. A synthetic call is created by a long position in the underlying combined with a long position in an at-the-money put option. How Time Decay Impacts Option Pricing Time decay is a measure of the rate of decline in the value of an options contract due to the passage of time. A wise trader surveys the condition of the overall market to make sure they are trading in the direction of the underlying trend of the stock. Higher deltas may be suitable for high-risk, high-reward strategies with low win rates while lower deltas may be ideally suited for low-risk strategies with high win rates. Stock Option Alternatives. This price will determine whether the trade is "free" or not as well as influence your break-even point. But you also want to limit losses. If the wrong strike price is chosen, the entire strategy will most likely fail. Short-selling a stock gives you a short position. The more it moves, the more profitable this trade becomes. Most stocks have different levels of implied volatility for different strike prices. How Options Work for Buyers and Sellers Options are financial derivatives that give the buyer the right to buy or sell the underlying asset at a stated price within a specified period. The equation expressing put-call parity is:. Advanced Options Concepts.

Pick the Right Options to Trade in Six Steps

Related Articles. The strike robinhood application questions when to sale stock is a vital component of making a profitable options play. We start with the assumption that you have already identified a financial asset—such as a stock, commodity, or ETF—that you wish to trade using options. If a trader is bullish, they would buy a calendar call spread. It is also called a synthetic long put. If prices do consolidate in the short term, the short-dated option should expire out of the money. ITM vs. Such opportunities are uncommon and short-lived in liquid markets. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Fence Options Definition A fence is a defensive options strategy that an investor deploys to protect an owned holding from a price decline, at the cost of potential profits. Case 1: Buying a Call. OTM options are less expensive than in the money options. Investopedia uses cookies to provide you with a great user experience.

Now the home buyer must pay the market price because the contract has expired. The less time there is until expiry, the less value an option will have. Types of Options. New options investors should consider adhering to some basic principles. Whether a trader uses calls or puts depends on the sentiment of the underlying investment vehicle. I Accept. Key Takeaways Trade as either a bullish or bearish strategy. In terms of valuing option contracts, it is essentially all about determining the probabilities of future price events. Some additional points about theta to consider when trading:. Table of Contents Expand. Combinations are trades constructed with both a call and a put. What objective do you want to achieve with your option trade? The examples in the following section illustrate some of these concepts. Bear in mind that results will differ depending on whether a trader is long or short.

Generally speaking, the bigger the stock gyrations, the higher the level of implied volatility. The potential home buyer needs to contribute a down-payment to lock in that right. Related Terms How a Bull Call Spread Works A bull call spread is an options strategy designed to benefit from a stock's limited increase in price. As the option gets further in the money, delta approaches 1. Delta is the ratio comparing the change in the price of the underlying asset to the corresponding change in the price of a derivative. Synthetic options are viable due to put-call parity in options pricing. The longer-dated option would be a valuable asset once prices start to resume the downward trend. Writer risk can be very high, unless the option is covered. Investopedia requires writers to use primary sources to support their work. Selling a naked or uncovered call gives you a potential short position in the underlying stock. Options trading can be speculative in nature and carry substantial risk of loss. But you also want to limit losses. ITM vs. Otherwise, it is probably easier to just re-establish a position in the stock at the market price. Partner Links. This measures sensitivity to interest rates. In this case, the trader will want the market to move as much as possible to the downside. How a Synthetic Call Works.

Related Terms What Is Delta? The reason that synthetic options are possible is due to the concept of put-call parity binary option trading expertoption how to trade btc futures in usa in options pricing models. Options Risks. The value of a butterfly can never fall below zero. OTM options are less expensive than in the money options. He is looking for a better percentage payoff, kid at mcdonalds makes millions trading stocks schwab brokerage account minimums if it means losing the full amount invested in the trade should it not work. This price will determine whether the trade is "free" or not as well as influence your break-even point. Well, they can—you know it as a non-refundable deposit. Theta measures the rate of time decay in the value of an option or its premium. Compare Accounts. But you may be allowed to create a synthetic position using options. Time decay represents the erosion of an option's value or price due to the passage of time. It is the price of the option contract. For instance, delta is a measure of the change in an option's price or premium resulting from a change in the underlying asset, while theta measures its price decay as time passes. The examples in the following section illustrate some of these concepts. I Accept. Problems arise, however, once you try to exit the position when the stock is trading at or above your break-even price: it will require you to fork over some cash since the day trading raleigh nc fxcm spread betting leverage value of the options will be negative. Therefore, the greater the volatility, the greater the price of the option.

In short, a call option gives the holder of the option the right to buy the underlying asset while a put option allows the holder to sell the underlying asset. A potential homeowner sees a new development going up. If used with margin to open a position of this type, returns have the potential to be much higher, but of course with additional risk. Options trading and volatility are intrinsically linked to each other in this way. Rick, on the other hand, is more bullish than Carla. Iron Butterfly Definition An iron butterfly is an options strategy created with four options designed to profit from the lack of movement in the underlying asset. For instance, delta is a measure of the change in an option's price or premium resulting from a change in the underlying asset, while theta measures its price decay as time passes. Similarly, a put option strike price at or above the stock price is safer than a strike price below the stock price. Conversely, an out-of-the-money OTM option means that no profit exists when comparing the option's strike price to the underlying's price. High implied volatility will push up premiums , making writing an option more attractive, assuming the trader thinks volatility will not keep increasing which could increase the chance of the option being exercised. Anything more may require an extended time period and low volatility before it can be repaired. For example, an out-of-the-money call option with a 0. Options do not have to be difficult to understand once you grasp the basic concepts. The value of delta ranges from to 0 for puts and 0 to for calls

This cost excludes commissions. Your Money. Alternative Covered Call Construction As you can see in Figure 1, we could move into the money for options to sell, if we can find time premium on the deep in-the-money options. There are four things you can do with options:. Theta is good for sellers and bad for buyers. It becomes an even better idea to unwind the position if the volatility in the stock has increased and you decide early in the trade to hold on to the stock. The tires represent the delta, best oil fracking stocks how does a stock gap intraday the gas pedal represents the underlying price. In the case of a call writer, the wrong strike price for the covered call may result in the underlying stock being called away. I Accept. In other xem usd tradingview nyse trading hand signals, the position delta is negative. Option Objective. Your Money. Types of Options.

Essential Options Trading Guide

Now, think of a put option as an insurance policy. Personal Finance. Technical Analysis Basic Education. Low delta options are like race cars with economy tires. Popular Courses. To change or withdraw your consent, click the "EU Privacy" link at the bottom of every page or click. Some stocks may not be possible to repair for sp500 index bollinger bands chart buy metastock uk and may require a small debit payment in order to establish the position. Since this is an OTM put, it is made up wholly of time value and no intrinsic value. Investopedia is part of the Dotdash publishing family. Accessed June 8, In this case, a trader ought to consider a put calendar spread. The equation expressing put-call parity is:. Therefore, we have a very wide potential profit zone extended to as low as

The movement may not be extremely rapid, but it's a continuous loss of value for the buyer. Theta is good for sellers and bad for buyers. Your Practice. A synthetic put is created by a short position in the underlying combined wit a long position in an at-the-money call option. Your Privacy Rights. One of the most important considerations when using the repair strategy is setting a strike price for the options. Case 1: Buying a Call. An OTM call can have a much larger gain in percentage terms than an ITM call if the stock surges past the strike price, but it has a significantly smaller chance of success than an ITM call. If the wrong strike price is chosen, the entire strategy will most likely fail. Partner Links. Compare Accounts. How a Synthetic Put Works. Personal Finance. Options can also be categorized by their duration. When market conditions crumble, options are a valuable tool for investors. When you buy a put option, you want a negative delta where the price will decrease if the underlying asset price increases. Investors who have suffered a substantial loss in a stock position have been limited to three options: "sell and take a loss," "hold and hope" or "double down. The value of delta ranges from to 0 for puts and 0 to for calls That gives them a higher return if the stock is called away, even though it means sacrificing some premium income. Partner Links.

Option Greeks: 4 Factors for Measuring Risks

In other words, if the stock's price rose high enough, the seller would have to sell shares to the option holder at the strike price when the market price was higher. CME Group. Personal Finance. That can be seen in Tables 1 and 3. In turn, this can have an adverse effect on the amount of capital committed to a vix option trading strategy macd signal calculation. Accessed June 8, A synthetic call is also known as a married call or protective. Doing your homework to select the optimum strike price is a necessary step to improve your chances of success in options trading. Also, if the market has little to no activity, coinbase new lessons ethereum wallet sign up at-the-money option can begin to lose value due to time decay. Related Terms Call Option A call option is an agreement that gives the option buyer the right to buy the underlying asset at a specified price within a specific time period. Note that a decrease in implied volatility, reduced time to expiration, and a fall in the price of the underlying security will benefit the short call holder. The offers that appear in this table are from partnerships from which Investopedia receives compensation. On a high level, this means traders can use delta to measure the risk of a given option or strategy. By using Investopedia, how long to get free stock from robinhood best brokers for stock trading accept. Delta values closer to 1. I Accept. The reason that synthetic options are possible is due to the concept of put-call parity implicit in options pricing models.

Accessed May 25, The plus or minus sign indicates an option's price direction resulting from a change in one of the listed variables. Otherwise, it is probably easier to just re-establish a position in the stock at the market price. Options can also be used to generate recurring income. Assume that you have identified the stock on which you want to make an options trade. At the same time, an increase in volatility, a greater time remaining on the option, and a rise in the underlying will benefit the long call holder. OTM options are less expensive than in the money options. These include white papers, government data, original reporting, and interviews with industry experts. Stock Option Alternatives. Let's breakdown what each of these steps involves. That is, the goal is to offset potential unfavorable moves in other investments. For example, an out-of-the-money call option with a 0. Futures Trading. Stock-specific events are things like earnings reports, product launches, and spinoffs. Therefore, the greater the volatility, the greater the price of the option. The opposite is true for put options. An in-the-money ITM call has a strike price below the price of the underlying asset and an out-of-the-money OTM call option has a strike price above the price of the underlying asset. What Are Options?

Fix Broken Trades With the Repair Strategy

Now, think of a put option as an insurance policy. This means that option holders sell their options in the market, and writers buy their positions back to close. Options Trading. Partner Links. Options as Derivatives. Case 1: Buying a Call. Related Terms Call Option A call option is an agreement that gives the option buyer the right to buy the underlying asset at a specified price within a specific time period. As the expiration date for the short option approaches, action must be taken. Compare Accounts. Example of a Synthetic Ticker symbols for bitcoin exchange atm sell bitcoin. The premium or price of an option is usually based on an option pricing model, like Black-Scholeswhich leads to fluctuations in price. These include white papers, government data, original reporting, and interviews with industry experts. Part Of. Therefore, the greater the volatility, the greater the price of the option. If a trader is bullish, they would buy a calendar call spread. In the early stages of this trade, it is a neutral trading strategy. Either way, the trade can provide many advantages that a plain old call or put cannot provide on its. TD Ameritrade.

Then, the two most important considerations in determining the strike price are your risk tolerance and your desired risk-reward payoff. In the early stages of this trade, it is a neutral trading strategy. Devise a Strategy. In this case, a trader ought to consider a put calendar spread. News Markets News. A synthetic call lets a trader put on a long futures contract at a special spread margin rate. Get Started With Calendar Spreads. The reason that synthetic options are possible is due to the concept of put-call parity implicit in options pricing models. Let's assume a trader has a bearish outlook on the market and overall sentiment show no signs of changing over the next few months. Upon entering the trade, it is important to know how it will react. However, an ITM call has a higher initial value, so it is actually less risky. In effect, at delta values of Any upside move produces a profit. This behavior occurs with little or no time value as most of the value of the option is intrinsic. If prices do consolidate in the short term, the short-dated option should expire out of the money. Seagull Option Definition A seagull option is a three-legged option strategy, often used in forex trading to a hedge an underlying asset, usually with little or no net cost. Selling options is also called shorting. The Greeks— delta , gamma , vega , theta , and rho —measure different levels of risk in an option. This is a situation in which your options will be priced much more attractively while you are still in a good position with the underlying stock price. The assumption is that the prices follow a log-normal distribution, like a coin flip.

Problems arise, however, once you try to exit the position when the stock is trading at or above your break-even price: it will require you to fork over some cash since the total value of the options will be negative. In other words, the position delta is negative. Luckily, you can unwind the options position to your advantage in some cases. Options trading involves certain risks that the investor must be aware of before making a trade. Technical Analysis. Advanced Options Trading Concepts. Identifying events that may impact the underlying asset can help you decide on the appropriate time frame and expiration date for your option trade. Options trading necessitates a much more hands-on approach than typical buy-and-hold investing. Types of Options. At the same time, an increase in volatility, a greater time remaining on the option, and a rise in the underlying will benefit the long call holder. Related Terms Put-Call Parity Put-call parity is a principle that defines the relationship between the price of European put options and European call options of the same class, that is, with the same underlying asset, strike price, and expiration date. Your Practice. Maybe some legal or regulatory reason restricts you from owning it. Some additional points about theta to consider when trading:. You would enter this strategy if you expect a large move in the stock but are not sure which direction. Buying a call option gives you a potential long position in the underlying stock. This makes gamma useful for determining the stability of delta, which can be used to determine the likelihood of an option reaching the strike price at expiration. Theta values appear smooth and linear over the long-term, but the slopes become much steeper for at-the-money options as the expiration date grows near.

Picking the wrong strike price may result in losses, and this risk increases when the strike price is set further out of the money. The policy has a face value and gives the insurance holder protection in the event the home is damaged. As the option gets further in the money, delta approaches 1. The potential home buyer download nq future intraday historical data algo trading at investment banks benefit from the option of buying or not. ITM vs. Most investors think this strategy can be considered similar to an insurance policy against the stock dropping precipitously during the duration that they hold the shares. You should have a game plan for different scenarios if you intend to trade options actively. TD Ameritrade. Call Option A call option is an agreement that gives the option buyer the right to buy the underlying asset questrade cfo epicor software stock price a specified price within a specific time period. Compare Accounts. Gamma measures the rate of changes in delta over time. Advanced Options Concepts. This is a situation in which your options will be priced much more attractively while you are still in a good position with the underlying stock price. The strike price has an enormous bearing on how your option trade will play. The offers that appear in this table are from partnerships from which Investopedia receives compensation. When you buy a call option, you want a positive delta since the price will increase along with the underlying asset price.

However, you russell microcap index fact sheet td ameritrade nsa custody fee still be up the premium you collected from writing the calls and even on your losing stock position earlier than expected. Key Takeaways Options trading can be complex, especially since several different options can exist on the same underlying, with multiple strikes and expiration dates to choose. If the market begins to move against a cash or futures position it is losing money in real time. In a long butterfly, the middle strike option is sold and the outside strikes are bought in a ratio of buy one, sell two, buy one. How Time Decay Impacts Option Pricing Time decay is a measure of the rate of decline in the value of an options contract craig harris forex trader trading forex on a coin toss to the passage of time. Options can also be distinguished by when their expiration date falls. Here, we can think of using options like an insurance policy. The Bottom Line. Selling a naked or uncovered call gives you a potential short position in the underlying stock. Long option traders benefit from pricing being bid up, and short option traders benefit from prices being bid. If the short option expires out of the money OTMthe contract expires worthless. If you move right to the next column, which represents a one-point move higher to fromyou can see that delta is It involves writing selling in-the-money covered calls, and it offers traders two major advantages: much greater downside protection and a much larger potential profit range.

Call Option Example. Journal of Technical Analysis. Long Calendar Spreads. This risk increases when the strike price is set further out of the money. For example, suppose that one out-of-the-money option has a delta of 0. A synthetic call is also known as a married call or protective call. Options contracts are also used for speculating on whether an asset's price might rise or fall. If the short option expires out of the money OTM , the contract expires worthless. Three things to keep in mind with delta:. Part Of. To change or withdraw your consent, click the "EU Privacy" link at the bottom of every page or click here. Volatility also increases the price of an option. Selling a naked or uncovered call gives you a potential short position in the underlying stock. Your Practice. Vega tells us approximately how much an option price will increase or decrease given an increase or decrease in the level of implied volatility. Investopedia uses cookies to provide you with a great user experience. Market-wide events are those that impact the broad markets, such as Federal Reserve announcements and economic data releases. They will be used by two investors with widely different risk tolerance, Conservative Carla and Risky Rick.

The value of a butterfly can never fall below zero. Investors use implied volatility, called implied vol, to forecast or anticipate future moves in the security or stock and in the option's price. You should have a game plan for different scenarios if you intend to trade options actively. But if the stock price declines, the higher delta of the ITM option also means it would decrease more than an ATM or OTM call if the price of the underlying stock falls. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Advanced Options Trading Concepts. Theta is good for sellers and bad for buyers. The sale of the short-dated option reduces the price of the long-dated option making the trade less expensive than buying the long-dated option outright. Gamma measures delta's rate of change over time, as well as the rate of change in the underlying asset. This cost excludes commissions. There are a few terms that describe whether an option is profitable or unprofitable. Figure 1: A bearish reversal pattern on the five-year chart of the DIA. There are some additional points to keep in mind about gamma:.