Blog #options-mechanics

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Bear Call Spread

Bear Call Spread. An alternative name is Credit Call Spread. Bearish position. It is a vertical spread involving an equal number of long and short calls on the same underlying asset and with the same expiration date. It is a credit spread, which means you receive money to put on the position. The strategy profits as long as the price of the underlying security remains below the breakeven point.

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Straddle

Straddle. An alternative name is Long Straddle. Neutral position. It is a combination involving an equal number of long puts and long calls at the same strike price and the same expiration date. It is a debit combination, which means you must pay to put on the position. Buy to open one at-the-money (ATM) call and simultaneously buy to open one ATM put.

Day trading options

The term “day trading” assumes that a trader opens and closes positions within a single trading session and doesn’t take positions overnight. Also, when talking about day trading, people generally think of instruments such as – equities, ETFs and futures. Not options.

How to read P&L Charts (part 1)

The question considered in this article might seem too obvious, and one might say that there is nothing to discuss. But our user support experience tells us that often people who are entirely new in options spent excessive time on trying to figure out what's happening on options payoff function profiles. Having a well-developed skill

Bear Call Spread

Bear Call Spread. An alternative name is Credit Call Spread. Bearish position. It is a vertical spread involving an equal number of long and short calls on the same underlying asset and with the same expiration date. It is a credit spread, which means you receive money to put on the position. The strategy profits as long as the price of the underlying security remains below the breakeven point.

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Straddle

Straddle. An alternative name is Long Straddle. Neutral position. It is a combination involving an equal number of long puts and long calls at the same strike price and the same expiration date. It is a debit combination, which means you must pay to put on the position. Buy to open one at-the-money (ATM) call and simultaneously buy to open one ATM put.

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Strangle

Long strangle, poor-man’s straddle. Neutral position. It is a combination involving an equal number of out-of-the-money (OTM) long puts and long calls with the same expiration date. It is a debit combination, which means you must pay to put on the position. The strategy profits when the price of the underlying security moves up or down beyond the breakeven points.

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Vertical Bull Debit Call Spread

Strategy name and alternative names Vertical bull debit call spread. An alternative shorter name is bull call spread. Main characteristics Moderately bullish. It is a vertical spread, which means it involves two or more options at different strike prices with the same expiration date.

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Option Expiration and Pinning

Options trading can appear intimidating to some traders. To make money, you must understand how option values fluctuate, the risks of option positions and the regulations pertaining to option expiration. You can have option positions that expire after periods ranging from one day to more than a year.

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Day trading options

The term “day trading” assumes that a trader opens and closes positions within a single trading session and doesn’t take positions overnight. Also, when talking about day trading, people generally think of instruments such as – equities, ETFs and futures. Not options.

How to read P&L Charts (part 1)

The question considered in this article might seem too obvious, and one might say that there is nothing to discuss. But our user support experience tells us that often people who are entirely new in options spent excessive time on trying to figure out what's happening on options payoff function profiles. Having a well-developed skill