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 the combination of a Bull Put Spread and a Bear Call Spread. The trade is created by selling a Put and buying a lower strike price Put and also selling a Call and buying a Call with a higher strike price. The short options have consecutive strike prices (short strangle).
The best way for me to explain what you are seeing in a typical UOA trade is to show you an example of a typical trade and then break it down for you. The first thing you will probably notice in the image above is that one of the trades says “SWEEP DETECTED” and the…
A Calendar spread is when you sell an option and buy another one with a more distant expiration date. This can be created with either puts or calls. For example, let’s say you wanted to play Netflix with calendar spread because you figure that the stock has dropped too far too quickly and will bounce…
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…
When an option seller or writer receives an exercise notice, assignment has occurred. When assigned, writers must deliver the goods (shares or cash). For example, let’s say you sold 1 AAPL 145.00 CALL and the buyer decides to exercise the contract at expiration because AAPL is now trading at 146, you would need to deliver…
