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 IV is low it generally means that the options contracts are cheap. See Historical Volatility
This is the idea that says that the price of the underlying asset will gravitate towards the point where the most options expire worthless. Some option traders will “trade around” or “trade off of” these levels by Selling Puts or Calls against it.
My name is Chris Corwin Gayle and I am a trader and Trading System developer. The purpose of this article is to break down the concept of Unusual Options Activity into simple language and show you exactly how to use it profitably. There are numerous sources online that are just outright misrepresenting what UOA is…
The Intrinsic Value is basically the value of an in-the-money option minus its time value. Intrinsic value is the current real tangible value of the options contract. The intrinsic value of a call option is calculated by subtracting the strike price of the Option from the underlying stock. For a put, intrinsic value is the…
Adjustments may be made to some of the standardized terms of outstanding options upon the occurrence of certain events related to the underlying security. The determination of whether to adjust outstanding options in response to a particular event, and, if so, what the adjustment should be, is made by OCC, taking into consideration policies established…
This is when you sell a call and buy a call with a higher strike price. A Bear Call Spread is used when you have a bearish outlook on a stock and you want to bet against it by going short but you don’t want to shirt the stock because it theoretically has unlimited risk….
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.
