Options Trading, beta, Uncovered Options, Naked Options, beta, volatility, trading system, stocks, options, qqq, spy

Beta

How a stock's movement correlates to the movement of the overall stock market is measured by beta. Beta is related to but is not the same as volatility.

Beta for the overall market is set to a value of one, then stocks with greater Beta than one have a higher volatility than the overall market. This is riskier than the market with a higher probability of outperforming the market, because this could provide greater returns in an up market and greater losses in the down market. There is a 30% higher volatility than the overall market when Beta is equal to 1.3. This equity would be expected to have moved up about 13%, if the market moved up 10% over a specific period of time. Stocks with Beta less than one, have a lower volatility than the overall market. Equities with negative Beta tend to move downward if the market goes up (opposite direction), and they tend to move upward if the market goes down (opposite direction).

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DISCLAIMER: THIS INFORMATION IS INTENDED FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE ANY FINANCIAL ADVICE. RISK IS INVOLVED IN ALL STYLES OF MONEY MANAGEMENT. Uncovered options trading involves greater risk than stock trading. You absolutely must make your own decisions before acting on any information obtained from this Website.

The return results represented on the web site are based on the premium received for the selling options short and do not reflect margin. It is recommended to contact your broker about margin requirements on uncovered options trading before using any information on this web site. Use our "Trade Calculator" to recalculate our past performance in relation to the margin requirements, brokerage commissions and other trading related expenses. Past performance is not indicative of future results.