Option
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Understanding Exercise Price: Options Trading Explained
What Is an Exercise Price? The exercise price is the price at which an underlying security can be purchased or sold when trading a call or put option, respectively. It is also referred to
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Understanding Put Option Exercise: A Comprehensive Guide
What Is a Put Option? A put option is a contract that gives its holder the right to sell a set number of equity shares at a set price, called the strike price, before a certain expiration date.
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Put-Call Ratio: Understanding Market Sentiment
What Is a Put-Call Ratio? The put-call ratio is a measurement that is widely used by investors to gauge the overall mood of a market. A put or put option is a right to sell an asset at a pre
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In-the-Money vs. Out-of-the-Money Options: A Clear Explanation
In the Money vs. Out of the Money: An Overview In options trading, the difference between in the money (ITM) and out of the money (OTM) is a matter of the strike prices position relative to the
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Short Selling vs. Put Options: Understanding the Differences
Short Selling vs. Put Options: An Overview Short selling and put options are fundamentally bearish strategies used to speculate on a potential decline in the underlying security or index.
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American vs. European Options: Key Differences Explained
American vs. European Options: An Overview American and European options have similar characteristics but the differences are important. For instance, owners of America
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Buy to Open Options: A Beginner's Guide
What Is Buy to Open? Buy to open is a term used by brokerages to represent the establishment of a new (opening) long call or put position in options. If a new options investor wants to buy a ca
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Understanding At-The-Money (ATM) Options: A Comprehensive Guide
What Is At The Money (ATM)? At the money (ATM) is a situation where an options strike price is identical to the current market price of the underlying security. An ATM option has a delta of ±0.
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Understanding Options Trading: 4 Fundamental Strategies
Four Basic Options Trades While there are many exotic-sounding variations, there are ultimately only four basic ways to trade in the options market. You can either buy or sell call options, or
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LEAPS: Understanding Long-Term Equity Options - Definition & Benefits
What Are Long-Term Equity Anticipation Securities (LEAPS)? Long-term equity anticipation securities (LEAPS) are publicly traded options contracts with expiration dates that are longer than one
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Open Interest & Trading Volume: A Guide for Options Traders
Price movements in the options market are a reflection of decisions to buy or sell options made by millions of traders. But the price isnt the only number that a successful options trader keeps an e
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Understanding Volatility: A Key Risk Indicator in Finance
What Is Volatility? Volatility is a statistical measure of the dispersion of returns for a given security or market index. In most cases, the higher the volatility, the riskier the security. Vo
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Understanding Stock Options: A Beginner's Guide to Puts & Calls
What Is a Stock Option? A stock option gives an investor the right, but not the obligation, to buy or sell a stock at an agreed-upon price and date. There are two types of options: puts, w
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Understanding Financial Spreads: A Comprehensive Guide
What Is a Spread? A spread can have several meanings in finance. Generally, the spread refers to the difference between two prices, rates, or yields. In one of the most common definitions, the
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Understanding Credit Spreads: Definition & Calculation
What is a Credit Spread? A credit spread is the difference in yield between a U.S. Treasury bond and another debt security of the same maturity but different credit quality. Credit spreads
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Bull Call Spread: Strategy, Benefits & Risk Management
What Is a Bull Call Spread? A bull call spread is an options trading strategy designed to benefit from a stocks limited increase in price. The strategy uses two call options to create a ra
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Options Pricing Explained: A Trader's Guide
You might have had success beating the market by trading stocks using a disciplined process anticipating a nice move either up or down. Many traders have also gained the confidence to make money in
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Range Accrual Notes: Understanding & Investment Potential
What Is a Range Accrual? A range accrual is a structured product based on an underlying index whose returns are maximized if that index stays within the investors defined range. Commonly referr
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Reference Entity Explained: Understanding Credit Derivatives
What Is Reference Entity? A reference entity is the issuer of the debt that underlies a credit derivative. The reference entity is the organization that issued the reference asset (bond or othe
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Understanding Bond Market Association (BMA) Swaps: A Comprehensive Guide
What Is a Bond Market Association (BMA) Swap? A Bond Market Association (BMA) swap is a type of swap arrangement in which two parties agree to exchange interest rates on debt obligations, where
Option
- Delta Explained: Understanding Option Pricing & Risk
- Understanding Exotic Options: A Comprehensive Guide
- In-the-Money vs. Out-of-the-Money Options: A Clear Explanation
- Implied Correlation Index (ICI): Understanding Market Relationships
- Understanding Stock Option Expiration Cycles: A Comprehensive Guide
- Stocks vs. Options: Understanding the Key Differences for Investors
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Cloud Accounting Benefits: 15 Ways to Transform Your Business FinancesIf your company still uses desktop software or spreadsheets for accounting, it may be time to consider upgradin...
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Top 10 Pitfalls for New Businesses & How to Avoid ThemNew businesses want to avoid posting this sign. Every busy downtown street has a storefront location that is "cursed." One month it was a pizza place. Six months later it was an opto...
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Mortgage Assumption: A Comprehensive Guide for BuyersA buyer who assumes a mortgage purchases a home and takes over the seller's mortgage debt. The buyer typically pays a cash deposit representing the difference between the offer price and the remai...
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Understanding Earnings: A Guide to Financial ProfitabilityEarnings refer to the income that an individual or organization gains during a certain period. They can be found on a company’s income statement and are used to measure the profitability of that...