This is when you sell an options contract and simultaneously buy one with a later expiration date and a higher or lower strike price.
For example, if your sell to open the AAPL NOV 145.00 Call and then buy to open the AAPL DEC 150.00 Call , you have created a diagonal spread.
See also: Credit Spread, Box Spread, Butterfly Spread
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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.
The exercise price setting formula for a series of delayed start options is the formula used by the options market on which the series is traded to set the exercise price for the series on the exercise price setting date. The exercise price setting formula is specified before the commencement of trading of each series…
If a physical delivery put option is exercised, the assigned writer must purchase the required number of shares at the specified exercise price regardless of their current market price. If a cash-settled option is exercised, the assigned writer must pay the cash settlement amount.
Options with intrinsic value, or in-the-money options, are automatically exercised at expiration so that option holders don’t inadvertently leave money on the table. Since June 2008 , all options that are a penny or more in-the-money at expiration are exercised at expiration.
The price change in an option for every point move in the underlying Stock/ETF. Put options have negative deltas. See Also: Delta Neutral
