This is an Options position where the total delta exposure is zero. For example, you can create a delta neutral position like this:
Since 100 shares has a delta of +1.00, if you go long 100 shares and long two Puts that have a delta of -.50 each, the position is delta neutral.
See Also: Delta
Tracking Options Flow can be very useful if you know how to take advantage of it. It basically allows you to see what the big traders are doing in real time. The common thinking is that these big traders know something that others don’t and are taking a position in anticipation of a move. However,…
These are options contract with no intrinsic value. A Call option is OTM when the strike price is above the current market price. A Put option is out-of-the-money when their strike price is below the current market price of the current market price. You should also check out In The Money Options & At the…
A covered call is executed when you buy the underlying stock/shares and then sell Calls against it. The trade is considered covered because the shares will cover what is now a short Call position. So this means the shorting/sale of the Calls was not “naked”. This method can be used to generate income using stock…
An Iron Butterfly is a trade that is created by putting on a Short Straddle (selling at the money puts and calls) and a Long Straddle (buying out of the money puts and calls). These types of trades limit the amount of money that you can make and it also limits the potential loss. But…
To anyone new to trading options. You need to understand, this is a craft. A skill. You must learn and respect it, or it is going to disrespect you. Very violently in some cases. You HAVE to know what you’re doing, not just THINK you know what you’re doing. You must understand the Greeks. This is essentially what your option is. If you…
