Stock Option Trading Education
- Synthetic Put Position: Option traders often construct synthetic put positions to hedge their short stock positions. When... read more
- Definition of Option Gamma: An Option Gamma measures the change in Delta for every one dollar change in the underlying price... read more
- : An option contract gives the buyer of the option the right, but not the obligation to buy (call)... read more
- Front Month Option Expiration: The nearest term stock option is referred to as the front month. In a four-week expiration cycle,... read more
- Diagonal Option Spread: A Diagonal Spread is an option spread where the trader buys a longer-term option and sells a... read more
- Option Bid Definition: An option bid is the price an option buyer is willing to pay for the option. If the stock option... read more
- Back Month Options Expiration : Back month stock options have more than one month before they expire. They are slightly less... read more
- Butterfly Option Spreads: In a Butterfly Spreadstrategy, all of the expiration months are the same. A trader buys a call... read more
- Definition of Option Theta: An Option Theta measures the rate of decline in a stock option due to the passage of time. Theta... read more
- Accelerated Time Decay: Accelerated Time Decay refers to options that have less than a month to maturity decay at an... read more
- Index Options and Indices: Index options include baskets of stocks that are combined from group or sector indices. The most... read more
- Option Bid/Ask Spreads and Liquidity: The Option Bid/Ask Spread is the difference between the stock option bid price and the ask price.... read more
- Definition of Option Vega: An Option Vega measures the change in the price of a stock option relative to a 1% change in... read more
- Strike or Exercise Price on Call Options: The strike price (exercise price) is the level at which the buyer of a call option can exercise... read more
- Definition of Option Delta: An option delta measures the change in the price of a stock option relative to the change in the... read more
