Expectancy Explained
Win rate is the most prominently displayed and least informative statistic in trading. A strategy winning 70% of the time loses money if the losers are three times the size of the winners.
Tag
education
Every StaxInvesting article tagged education · 21 posts.
21 articles
Vertical Spreads Explained
The vertical is the simplest multi-leg structure and the one most others are built from — and it is defined-risk under an assumption that occasionally fails at expiration.
What Is an Option Chain?
The chain is where every options decision starts, and most of the mistakes people make with it come from treating all the columns as equally reliable. They are not.
Market Order vs Limit Order
Almost every order-type question in trading reduces to this one — and the two failure modes are opposite in a way that determines which belongs where.
Position Sizing and the Divide-by-20 Rule
Position sizing is the only control in trading that works regardless of whether you are right. Everything else depends on the market cooperating in some way — sizing does not.
Cash Settlement vs Physical Delivery
Two contracts can track nearly identical exposure and resolve completely differently — one leaves a number in your account, the other leaves a hundred shares per contract you have to fund.
Bid-Ask Spread Explained
The spread is the least discussed and most consistently paid cost in trading, because it never appears on a statement as a fee — and it is the only liquidity measure that is actually current.
Assignment vs Exercise
The two words describe opposite ends of the same event, and confusing them obscures the fact that only one side has a choice — the seller finds out afterward.
Volatility Skew Explained
If implied volatility were a property of the underlying, every option on it would share the same figure. They do not — and the shape of that disagreement tells you which direction the market considers dangerous.
The VIX Explained
The VIX is the most widely cited number in options and the most widely misunderstood, mostly because people treat it as a forecast rather than what it actually is — a price.
What Is DTE (Days to Expiration)?
DTE is the variable that turns an option from a position into a deadline — and whether a contract expiring today counts as 0 or 1 sounds trivial until it gates an exit rule.
Long vs Short Options Positions
In options, long and short do not mean bullish and bearish. They mean which side of the contract you are on — and that determines your risk profile more than whether it is a call or a put.
Call vs Put Options
Two contract types, four positions, and one distinction that determines the entire risk profile — and it is not the one most people focus on.
Strike Price Explained
The strike is the one term in an option contract that you choose, which makes it the one worth understanding properly — and the place an automated options strategy is most often subtly wrong.
Rho Explained
Rho is the Greek most often skipped, and skipping it is usually the right call — provided you know why, and know the one case where the assumption behind it can quietly distort other Greeks.
Vega Explained
Vega is the Greek that explains losses nobody expected — the ones where the underlying did exactly what you wanted and the position still went backwards.
Moneyness: ITM, ATM, OTM
Three terms that sound like jargon and encode most of what determines an option's behaviour — including the one that decides whether a short position can turn into an unexpected stock position overnight.
Intrinsic vs Extrinsic Value
Every option premium is these two components added together, and knowing the split tells you what you are actually buying — a bet on movement, or a leveraged position in the underlying.
Open Interest Explained
Volume and open interest sit next to each other on every option chain and measure different things — and the fact that open interest is always a day behind is the most practical thing to know about it.
IV Rank vs IV Percentile
These two measures can disagree sharply about the same day, and the disagreement is the point. One extreme week can make rank say conditions are calm while percentile says they are unusually active.
Implied Volatility Explained
Implied volatility explains why an option can lose money while the underlying moves in your favour — which makes it the concept most worth understanding early.