by Henry Liverman | May 29, 2021 | Market Definitions
An options strategy which protects against large losses while also limiting gains. This is done through two strategies known as protective puts and covered calls. The protective collar itself consists of a long position in the underlying security, a put option...
by Henry Liverman | May 28, 2021 | Market Definitions
An investment similar to a bond made up of a bundle of home loans bought from the banks that issued them. Investors in MBSs receive periodic payments similar to bond coupon payments. Of note, the MBS is only as safe as the mortgage loans that are backing it up. The...
by Henry Liverman | May 28, 2021 | Market Definitions
An options trading strategy designed to protect an investor from drastic drops in the price of a stock. The investor, while holding a long position on a stock, purchases an at-the-money put option of the same stock to protect themselves against depreciation in the...
by Henry Liverman | May 28, 2021 | Market Definitions
A similar strategy to a straddle but with utilizing options at different strike prices. A strangle options strategy is achieved when an investor has a position in a call and a put option with different strike prices but with the same expiration date and underlying...
by Henry Liverman | May 28, 2021 | Market Definitions
An options trading strategy involving a trader purchasing a long call and a long put on the same underlying asset at the same strike price and with the same expiration date. The objective is to profit from a very strong move in either direction by the underlying...
by Henry Liverman | May 28, 2021 | Market Definitions
A trading strategy attempting to profit from the low volatility of an underlying asset. An iron condor options strategy consists of two puts (a long and a short) and two calls (also a long and a short) along with four strike prices, all with the same expiration...
by Henry Liverman | May 27, 2021 | Market Definitions
An options trade that uses 4 different contracts as part of a wider strategy to benefit from stocks or futures prices moving within a defined range. It is constructed similarly to a short-straddle trade, with a long call and long put option purchased for protection. ...
by Henry Liverman | May 27, 2021 | Market Definitions
Also called a net debit spread. A strategy involving a investor simultaneously buying an option with a higher premium and selling an option with a lower premium. The investor is said to be a “net buyer” and expects the premiums of the two options (or the...
by Henry Liverman | May 27, 2021 | Market Definitions
An options strategy involving the purchase of one option and the sale of a second option in the same class and expiration but with different strike prices. This is designed to make a profit when the spreads between the two options narrows. Investors receive net...
by Henry Liverman | May 27, 2021 | Market Definitions
An options trading strategy designed to take advantage of a stock’s limited increase in price. It achieves this by placing two call options to create a range consisting of a lower and upper strike price. This helps limit the losses (but also caps the gains). ...
