Guide
Writing Options
Writing options means accepting a contractual obligation in exchange for premium, so the real question is not how much income the trade produces but what risk remains if the option is assigned.
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MarketReview author profile
Eric Baker
Trading and Quantitative Markets Contributor
ActiveEric Baker brings more than two decades of trading experience to MarketReview, including work with personal accounts and at a proprietary trading firm. He continues to follow and participate in markets, with a particular interest in the decisions traders make when outcomes cannot be known in advance.
His writing concentrates on process: estimating probabilities, sizing positions, comparing expected return with downside risk and deciding how much uncertainty a strategy can bear. He also draws an important distinction between decision quality and outcome. A winning trade may have been poorly judged, while a sound decision can still lose money.
Eric contributes to MarketReview’s coverage of active trading, futures, derivatives and quantitative decision-making. He explains numerical ideas in practical terms, while making clear that models and calculations are tools for managing uncertainty—not ways to remove it.
Areas of coverage
- Trading
- Market probabilities
- Quantitative decision-making
- Risk management
- Futures
- Derivatives
Published work
Latest work by Eric Baker
News, analysis and evergreen financial guides credited to this author.
Guide
Using Options to Manage Risk
Options can limit selected portfolio and business risks, but effective hedging requires matching the contract, cost and duration to the exposure being protected.
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Guide
Trading Options for Profit
Options can magnify a market view, but profitable trading depends on contract selection, pricing, volatility, execution and disciplined risk management, not direction alone.
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Guide
How Options are Structured
An options contract is built from a small set of terms that determine exactly what can be bought or sold, at what price, in what quantity and until when.
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Guide
Managing Risk with Futures Trading
Futures risk management starts with understanding contract exposure, sizing positions deliberately and planning for margin, execution, volatility and expiration before a trade is opened.
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Guide
Time Frames with Futures Contracts
Futures do not have one standard time frame: contract months, expiration dates, holding periods and hedge horizons are separate decisions that affect liquidity, risk and rolling costs.
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Guide
Futures Contracts as Hedging Strategies
Futures can reduce the effect of adverse moves in commodity, currency, interest-rate and equity prices, but an effective hedge depends on contract direction, timing, size, basis and liquidity.
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Guide
Futures Contracts for Speculation
Futures speculation lets traders seek profit from rising or falling prices, but contract size, margin, daily settlement and expiration make risk management as important as the market forecast.
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Guide
What Can Be Traded with Futures
Futures markets cover far more than commodities, with standardized contracts providing exposure to equity indexes, interest rates, currencies, crypto, weather and other benchmarks.
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