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The time Value of Options refers to the value of the options contract beyond its intrinsic value. Time value is equal to the extrinsic value of the options contract. Out-of-the-money…

This is a measure of Historical Volatility computed as the annualized standard deviation of returns over a period of days (20, 30, 90 days). See also Implied Volatility & Historical…

This is a spread trading strategy that involves buying and selling options, but the trader typically sells a greater number of contracts sold than what is purchased. See also Ratio…

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 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…