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...
by Henry Liverman | May 26, 2021 | Market Definitions
A determination set by the Supreme Court of the United States in 1946 that determines what qualifies as an “investment contract” and thus would be subject to US securities laws and regulations. It determined that an investment contract exists if an...
by Henry Liverman | May 26, 2021 | Market Definitions
The first derivative of delta that is used to try and gauge the price movement of an option relative to the amount is it in out out of the money (ie, if it is an options contract that only contains extrinsic value). When the option being measured is deep in or out of...
by Henry Liverman | May 26, 2021 | Market Definitions
An exchange where futures contracts are traded by participants. Today, the majority of futures trading (or derivatives contracts that lock in future delivery of a commodity or security at a price set at present) occurs electronically. Futures trading is regulated by...
by Henry Liverman | May 26, 2021 | Market Definitions
An overall increase in the cost of living that occurs when demand outpaces the available supply of a consumer good. This form of inflation is a key tenant of Keynesian economics, describing it as a result of an imbalance in the aggregate supply and demand. This is a...
by Henry Liverman | May 25, 2021 | Market Definitions
One of four major risk measures used by options traders (the others being gamma, theta, and vega). Within options trading, delta is a ratio (sometimes referred to the “hedge ratio”) that compares the price of an underlying asset with the change in the...
by Henry Liverman | May 25, 2021 | Market Definitions
The measuring of the average change in prices over time for consumers buying a basket of goods and services. It is the most widely used measure of inflation and thus also the effectiveness of a given government’s economic policy. In essence, what it does is...
by Henry Liverman | May 25, 2021 | Market Definitions
A popular options trading strategy to generate income through options premiums. To execute this call, an investor holds a long position in an asset while selling call options on that same asset. It is a strategy utilized by an investor who plans to hold an...
by Henry Liverman | May 25, 2021 | Market Definitions
A type of inflation that occurs when the demand for a commodity remains constant yet the cost of production is rising. This pushes the burden for the price increase on the consumer, as producers raise prices to maintain profits in the face of unchanged demand. If...
