Implied volatility or IV crush are descriptions for when an options vega premium dropped dramatically out of its pricing. This usually happens after a major event has passed for the underlying stock or market for the option contract. The most common time to see IV crush in a stock option is after an earnings announcement […]
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Option trading can be explained as buying or selling a contract with the expectations of making money before the option expires. An option buyer wants an option to go higher and be able to sell it for more than they bought it for before expiration or have it exercised with intrinsic value for more than
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An online options profit calculator can help with the math of understanding the dynamics of an option play from opening it until it is closed and whether it is profitable. An option play can be long or short with one leg (position), it can be a spread with more than one leg (positions), or a
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Here is a link to a great stocks and options tracking spreadsheet template on Google documents that can be used for tracking your trades. This spreadsheet allows you to keep track of each of your trades and manage them in one place. Click here to access the Options Tracker Spreadsheet on Google Sheets Created at
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The broken wing butterfly is an option play that is also called a skip strike butterfly and can be constructed with calls or puts. It is an adjustment to a conventional butterfly option play. This strategy using call options consists of embedding a short call option spread inside of a long call butterfly spread. An
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The married put is an option trading play created usually when a trader is bullish on the stock in the long term but also wants to limit the downside risk of loss in the shorter term. This strategy gives the stock owner all the benefits of owning the stock like capital gains and dividends but
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In options trading, moneyness is the relationship of the current price of the underlying asset to the strike price of a call or put option contract written on that asset. With options trading, the difference between ‘in the money’ and ‘out of the money’ is entirely based on the relationship between the strike price to
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Options are interchangeable financial contracts that give the buyer the right to call or put a stock or commodity on someone based on the strike price and the underlier. Options contracts are are not assets like bonds that own debt or stocks that are ownership of equity in a company. they are more bets on
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In options trading, a debit spread or net debit spread play is created when a trader both buys an option with a higher premium and sells an option with a premium that is lower in price at the same time. The debit spread option play is when the value of options bought is greater than
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A reverse conversion option play is a type of arbitrage trade used to make money from selling the option premium of a put option that is priced too high but is structured in a way that profits regardless of the following price action of the underlying stock. This option play is created by opening three
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