A closing purchase is an order that you place to offset an existing short position.
For example, If you sell a call option to open a new position, you would then need to offset or close that position with a closing order to buy. In other words, you would buy-to-close.
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…
What is an Option Sweep? An option sweep is basically when a big trader breaks up a large order into small individual trades. This is usually done in order to get filled fast or to conceal a large order. The common thinking is that a sweep usually means a big trader knows something and is…
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….
DTE means Days To Expiration. This is basically the number of days left until your Option contracts expire. As an options trader you will want to play very close attention to the DTE when you are selecting which contract to buy or sell. The number of days to expiration can impact the profitability of a…
This is also known as a Crossed Trade and it is basically a transaction/trade that is done from one broker to another ( broker to broker) rather than in the open market place. See Also Option Conversion
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…
