What is Options Time Value?

This is when you sell Put options with the intention or to take delivery of the underlying shares. Cash is deposited in the account and, if the stock price falls to the strike price of the put option, you get the delivery of the shares into the account once the Options expire.

This is a spread strategy that involves selling options and buying a greater number of out-of-the-money options. Backspreads are often in a ratio of 1 to-2 or 2-to-3 and most traders use them because they work well when there is an increase in market volatility especially when they think the market is about to move…

This is the process of satisfying put exercise or call assignment. In either case, stock is delivered. In the case of indexes, delivery involves the transfer of cash equal to the settlement value of the index minus the strike price of the options contract. See also: Options Assignment, Automatic Exercise, American Style Option

This is the difference between the current bid price and the current asking, or offering price. For example, if you see a quote that looks like this: 2.05 x 3.10 – what this means is that the bid is 2.05 and the ask is 3.10. Therefore the bid-ask thread is 1.05 i.e the difference between…

DTE means Days To Expiration. This is basically the number of days left until your Option contracts expire.  As an options trader you will want to play very close attention to the DTE when you are selecting which contract to buy or sell. The number of days to expiration can impact the profitability of a…

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