What Is The Options Automatic Exercise Value Of A Capped Option?

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 an options contract, put or call, that can be exercised at any time prior to expiration. Stock, exchange-traded funds, and some index options also settle American-style. The alternative is the European Style Option which can only be exercised at expiration.

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 when you put on a short option position and hedge it with another option position or with long shares. This is essentially the opposite of a naked write.

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…

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…