Block Trade

This is the combination of a Bull Put Spread and a Bear Call Spread. The trade is created by selling a Put and buying a lower strike price Put and also selling a Call and buying a Call with a higher strike price. The short options have consecutive strike prices (short strangle).

The cap interval is a constant established by the options market on which a series of capped options is traded. The exercise price for a capped-style option plus the cap interval (in the case of a call), or minus the cap interval (in the case of a put), equals the cap price for the option….

The rules of the options markets generally limit the maximum number of options on the same side of the market (i.e., calls held plus puts written, or puts held plus calls written) with respect to a single underlying interest that may be carried in the accounts of a single investor or group of investors acting…

If a physical delivery put option is exercised, the assigned writer must purchase the required number of shares at the specified exercise price regardless of their current market price. If a cash-settled option is exercised, the assigned writer must pay the cash settlement amount.

The expiration cycle basically refers to the months available for a set of options. An example of an expiration cycle is March, June, September and December.

A Calendar spread is when you sell an option and buy another one with a more distant expiration date. This can be created with either puts or calls. For example, let’s say you wanted to play Netflix with calendar spread because you figure that the stock has dropped too far too quickly and will bounce…