Delta Neutral

This is basically the level of volatility reflected in the current options prices. Each options contract has a unique level of implied volatility that is computed using an options pricing model. The Implied Volatility (IV) is fluid and consistently changing. When the IV is high, it indicates that the option premiums are expensive. When the…

Fixed Return Options (FROS) are basically a type of Option contract with a set outcome. These are similar to binary options contracts that would pay out $100 if the contract is in-the-money at expiration and zero if the contract is out-of-the-money.

This is when you enter into a position by purchasing one part of the spread at a time rather than buying it all at once. Legging can improve the risk-reward of the trade if the underlying stock moves in the right direction. If not, it can reduce the potential loss.

Parity is basically a set of rules of equality that exist in the options market. For example, long stock and long puts is the as owning long calls. Parity generally holds, but (all else being equal) puts will often trade at lower prices than calls due to the impact of dividends and interest rates.

This is a spread  where the premium received from selling part of the spread is greater than the premium paid for the other part of the spread. For instance, if you sold the AAPL 140.00 Calls @ 4.00 and bought the AAPL 142.00 Calls for 2.00 you have a credit of 2.00. See also Bear…

Time value is whatever the premium of the option is in addition to its intrinsic value. Time value is that part of the premium that reflects the time remaining before expiration. An American-style option may ordinarily be expected to trade for no less than its intrinsic value prior to its expiration, although occasionally an American-style…