Options Ratio is basically the number of puts traded divided by the number of calls. It can be applied to an individual stock, a sector, an index, or an entire market.
Put/call ratios are generally used in contrary manner. For example, when ratios reach extremely high levels, put buying is unusually high and it could be an indication that pessimism is too high. From a contrary view, high levels of pessimism are often a good time to turn bullish.
See also Ratio Back Spread
The time Value of Options refers to the value of the options contract beyond its intrinsic value. Time value is equal to the extrinsic value of the options contract. Out-of-the-money options consist only of time value. The value of in-the-money options can include both intrinsic value and time value. See also In The Money Options,…
A Golden Sweep Option (GSO) is popularized by the folks at Flowalgo and it is basically a very large order that hits the market and takes all or most the inventory/offers at once. This is usually a very high probability signal given the aggressive stance of the trader(s) behind it. These orders can be both bullish…
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.
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…
A Box Spread is simply a combination of two vertical spreads. These spreads are used by professional Options traders who are trying to take advantage of a situation where the cost of the spreads (both verticals) is less than what the verticals would be worth when they expire. They consider this to be a type…
What is an Option Sweep? An option sweep is basically when a big trader breaks up a large order into small individual trades. This is usually done in order to get filled fast or to conceal a large order. The common thinking is that a sweep usually means a big trader knows something and is…
