Cash Settlement

This is basically a combination of Bull Spread and Bear Spread. The main feature of this strategy us that your risk is fixed and your upside/profit is capped. Selling options with the same strike price and also buying options with the same expiration months, but higher and lower strike prices. Generally, the butterfly is in…

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….

I’ve been asked and have explained The Wheel strategy many times, so I thought it may be a good idea to write it down all in one place for posterity! This is the only options strategy I use and IMHO it is about as low risk and reliable as options trading gets. You will NOT get…

With the recent move by top brokers like TD Ameritrade to eliminate commissions there have been lots of new traders opening new accounts there. A lot of these traders are coming from using apps like Robinhood which are popular for their simplicity so starting to use a new platform like TOS can be quite a challenge….

This is the idea that says that the price of the underlying asset will gravitate towards the point where the most options expire worthless. Some option traders will “trade around” or “trade off of” these levels by Selling Puts or Calls against it.

When an option seller or writer receives an exercise notice, assignment has occurred. When assigned, writers must deliver the goods (shares or cash). For example, let’s say you sold 1 AAPL 145.00 CALL and the buyer decides to exercise the contract at expiration because AAPL is now trading at 146, you would need to deliver…