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). ...
by Henry Liverman | May 27, 2021 | Market Definitions
An options trading strategy used by a bearish investor to maximize profit and minimize loss. When the trader expects the decline of a security or asset price, a bear put spread may be implemented by purchasing put options while also selling the same number of puts on...
by Henry Liverman | May 26, 2021 | Market Definitions
A way of understanding the risk exposures related to an option or a book of options. Options traders will refer to the delta, gamma, vega, and theta of their option positions, referring to measurements of the sensitivity of an option’s price relative to...
