Trading Options Using a Diversified Trading System

Guest Post from Michael Filighera  Using Diversified Trading Systems (DTS) for equity options markets can produce strong results.  Trading equity options can be used to add “beta” to an existing trade or as “the” trading vehicle. There are several concepts that are necessary to understand prior to trading options based on DTS trading signals. Definitions Call option – is an option contract in which the holder (buyer) has the right (but not the obligation) to buy a specified quantity of a security (underlying) at a specified price (strike price) within a fixed period of time (expiration). The writer (seller) of a call option has the obligation to sell the security (underlying) at a specified price (strike price) if the option is exercised.  The writer (seller) is paid a premium for taking the associated risk with the obligation. Put option – is an option contract in which the holder (buyer) has the right (but not the obligation) to sell a specified quantity of a secur
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