Ask Definition

This is when you sell an options contract and simultaneously buy one with a later expiration date and a higher or lower strike price. For example, if your sell to open the AAPL NOV 145.00 Call and then buy to open the AAPL DEC 150.00 Call , you have created a diagonal spread. See also:…

The cap price is the level that the automatic exercise value of a capped option must reach in order for the option to be automatically exercised. The cap price of a call option is above, and of a put option below, the exercise price of the option.

A call option is deep in-the-money when the strike price is well below the current market price. A put option is deep-in-the-money when the strike price is much higher than the current market price. On the Option Chain below, box “A” shows us the Deep in the Money Calls and box “B” shows the Deep…

Front Month contracts are options contracts that have the least amount of time remaining before expiration. For example, on the 1st of August, the front month contract would the contract that expires in the Month of August. Similarly, on August 31st, the front month contract is the September contract is the front month contract because…

A Box Spread is simply a combination of two vertical spreads. These spreads are used by professional Options traders who are trying to take advantage of a situation where the cost of the spreads (both verticals) is less than what the verticals would be worth when they expire. They consider this to be a type…

No.  Investors look to the confirmations and statements that they receive from their brokerage firms to confirm their positions as option holders or writers. An option holder looks to the system created by OCC’s rules, rather than to any particular option writer, for performance of the option he owns. Similarly, option writers must perform their…