European Style Option

This is when you sell a straddle against shares that you already own. It is important to note that the covered straddle is not really fully covered since only the calls are covered. The strategy has a bullish bias.

When the price of the underlying stock is equal to the strike price of the option, the contract is At The Money. In the image below you can see that the current price of APPL is 139 and the red rectangles are highlighting the fact that the JUL 15th 139.00 Calls & Puts are currently…

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…

The expiration cycle basically refers to the months available for a set of options. An example of an expiration cycle is March, June, September and December.

This is an order that you would place to offset an existing long position. For example, If you buy a call option to open a new position, you would then need to offset or close that position with a closing order. This is an order to sell-to-close.

Front Month contracts are options contracts that have the least amount of time remaining before expiration. For example, on the 1st of August, the front month contract would the contract that expires in the Month of August. Similarly, on August 31st, the front month contract is the September contract is the front month contract because…