What is a leap? LEAPS is an acronym for options contracts called a Long Term Equity Anticipation Security. Leaps are derivatives with a long term expiration date that have prices that fluctuate along with the underlying stock or index it is written on. LEAPS have much longer time periods before expiration than traditional monthly options […]
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A naked put option calculator allows an option trader to key in the following data points: Stock Price. Put option strike price. Naked put option premium credit received. Days until expiration. Margin interest rate when needed. An option trader must consider whether the put option is a cash-secured put in a cash settled account or
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A covered call calculator allows an investor to enter in: Stock price Strike price Call premium Days until expiration Margin interest rate You can then see the analysis of the parameters of the covered call write: Cost of the shares. Credit received from selling call options. Total capital required for the option play. Cost basis
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A “squeeze” is price action that is so strong in one direction that it forces traders and investors to change their market positions based on moves going too far against them. The momentum that causes traders to exit or reverse their positions can start a feedback loop that feeds on itself making the move bigger
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To make money with option contracts a trader must be right about many factors based on both the underlying stock and the option contract chosen to buy or sell short. Here are the top ten considerations to consider before trading an option contract. Bullish option traders can either buy call options or sell put options,
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The delta of an option is the magnitude of the move in the underlier that the option will capture currently based on the odds of the option expiring in-the-money. Option delta is represented as the velocity of a price change in an option with a 1 point move in the underlying asset and is usually
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Here is a list of the best books on options trading based on Amazon sales, reviews, ratings and author popularity. It is important to have a full understanding of the options market and pricing model before diving into options trading with real money. Options are derivative contracts and complex instruments where time, strike price, and volatility
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Theta Gang is the slang for being a member of a group of other option writers with the mindset that selling premium is a preferred strategy than buying options. They are short Theta by selling option contracts as their strategy to profit from option buyers as time value decays and the option eventually expires worthless.
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Maximum pain for an options chain can show the option trader the expiration date price that will cause the option buyers to lose the most money. The max pain level is the strike price with the highest volume of open contract put options and call options for a set expiration date. The maximum pain price
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The bearish butterfly option play, (not to be confused with the bearish butterfly chart pattern) is an adjusted butterfly option spread which is a neutral options trading play that is structured to profit from bearish price action. Option traders create this option play when they have bearish signals on a chart pointing to the market
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