Ratio Backspread

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…

Options Ratio

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…

What Is Parity?

Parity is basically a set of rules of equality that exist in the options market. For example, long stock and long puts is the as owning long calls. Parity generally…

Out Of The Money

These are options contract with no intrinsic value. A Call option is OTM when the strike price is above the current market price. A Put option is out-of-the-money when their…

Moneyness

This is basically the amount of intrinsic value that an options contract has. In other words, it is the relationship between the strike price of the option and the price…