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. […]
Theta Gang Option Strategies Read More »
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
Max Pain Calculator for Options Read More »
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
What is Implied Volatility Crush? (IV Crush) Read More »
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
Options Profit Calculator Read More »
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
Broken Wing Butterfly Options Play Read More »
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
What is a Debit Spread Option Play? Read More »
A bearish credit spread refers to an option play constructed so the value of the spread position increases if the price of the underlying stock falls. A bearish credit spread is constructed with two call options. A bear call spread or credit call spread is an option play that is one kind of vertical spread. A bear call spread
Bear Call Spread Explained Read More »
In trading Delta hedging is a way to structure an option play to decrease or even eliminate the directional risk exposure of a stock holding or other option contracts. Stocks and options have directional exposure to a move in the market price, this is called Delta which is reflected by how much money a position
What is Delta Hedging? Read More »
Here is the option play strategy guide from my Options 101 eCourse. The columns give the names of the option play and the sentiment that an option trader would have when they open the position. You can also see if whether the profit and risk is open ended or capped with the contract size if
Option Strategies Cheat Sheet Read More »
In options trading a credit spread is an options play where a trader buys one option and sales another option contract of the same stock and expiration but at different strike price levels. This type of option play construction attempts to make a net profit when the price spread between the two different options gets
Credit Spreads in Options Trading Read More »