Crossed Sale

This is when you own shares in a particular stock and then you sell Calls against it and then buy Puts. You would use this strategy when you think that the stock rice is a little overdone and you are expecting some downside. This has limited risk due to the long put option, but 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.

Options sweeps that go off near the ask are usually signs of aggression and a possibility of a higher probability trade. This is due to the fact that a trade that goes off at the ask means that the trader thought it was more important to get into the trade, by hitting the ask, than…

A block trade is, as the name suggests, a single large order that hits the Unusual Options Activity Tape all at once.  A Sweep is a large order that is broken up and hits the tape in many different small orders.  Here is an example of Block Trade:  And here is an example of a…

This is also known as the “actual volatility” and it measures the past price movement of an underlying asset. The historical information offers a comparison of what of what is happening with present volatility and what has happened in the past. You can also check out Implied Volatility (IV)

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…