Options Delivery

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…

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…

These are the Options with the most time left until expiration. Or, simply, the most distant expiration months. As you can see in the image below, the Jan 2024 and the Jun 2024 expiration would be considered the “back months” because they have 570 and 724 days to expiration, respectively.

This is the process of carrying out the terms of an options contract. A call buyer can exercise his or her right to buy the stock at the strike price. A put owner can exercise his or her right to sell the contract. See also: Exercise Price, Exercise Settlement Value, Automatic Exercise

The cap price is the level that the automatic exercise value of a capped option must reach in order for the option to be automatically exercised. The cap price of a call option is above, and of a put option below, the exercise price of the option.

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:…