Posts by ivtrades

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…

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…

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…

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…

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"…

This is when you enter into a position by purchasing one part of the spread at a time rather than buying it all at once. Legging can improve the risk-reward…

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…

This is basically a big change in Implied Volatility [IV]. IV gaps higher when the market expects the underlying Stock/ETF to make a big move in the short term. IV…

An Iron Butterfly is a trade that is created by putting on a Short Straddle (selling at the money puts and calls) and a Long Straddle (buying out of the…