Technical analysis is the study of past price patterns to identify market trends and predict future prices. Technical analysts believe that the collective actions of all participants in the market, including buyers and sellers, producers and consumers, investors and speculators, etc., ultimately determine market prices. Therefore, technical analysis focuses on …

Monetary policy is the process by which a government, central bank, or monetary authority manages the money supply to achieve specific objectives. In most countries, these objectives are stabilization of prices and maintenance of low inflation. Monetary policy is also used to manage economic growth, employment, and exchange rates. Monetary …

The VIX is an index that measures the volatility of the S&P 500. It is often referred to as the “fear index” because it spikes when investors are worried about the stock market. The VIX is calculated by using options prices, which are a way to bet on future stock …

The zero-cost collar strategy is an options trading strategy that involves the simultaneous purchase of a put option and the sale of a call option. The options are usually of the same maturity, and the transaction results in a zero or small credit to the trader’s account. This strategy is …

Machine learning is a subset of artificial intelligence that deals with the creation of algorithms that can learn from, and make predictions on, data. These algorithms are able to automatically improve given more data. Machine learning is a powerful tool that can be used for a variety of tasks, such …

The Fed, or Greenspan, put is a monetary policy tool used by the Federal Reserve to help stabilize the economy. The name comes from former Federal Reserve Chairman Alan Greenspan, who is credited with using the tool to help stave off a recession in the early 2000s. The Fed put …

Correlation is a statistical measure of the relationship between two variables. In trading, correlation is used to identify relationships between different securities. For example, a trader might want to know if two stocks move in the same direction. If they do, they are said to be positively correlated. If they …

The Black-Sholes-Merton model is a mathematical model for pricing financial options. The model is used to calculate the theoretical value of an option, which is the amount that the option holder would be paid if they exercised the option. The model takes into account factors such as the underlying asset’s …

Commodity derivatives are financial instruments whose value is based on an underlying commodity. These derivatives can be used for hedging purposes or for speculation. The most common types of commodity derivatives are futures, options, and swaps. Due to their seasonal nature, valuing commodity derivatives requires pricing models that are different …

The volatility term structure is the relationship between implied volatility and time to expiration. The term structure is important because it provides information about the market’s expectations for future volatility. For example, if the term structure is downward sloping, it means that the market is expecting implied volatility to decrease …