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The Best Stocks To Write Covered Calls | Criteria & Examples

Here are the best stocks to write covered calls. But first we consider exactly what a covered call is and what we need to look for in a stock to be used in the strategy. The investment and trading behind covered calls might not be the most intuitive process in the world, but they offer […]

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Further Reading On Options Trading...

Put Call Parity

Put Call Parity Introduction Options trading can be relatively simple and can also become highly technical. One of the most important basic concepts when it comes to trading options is ...
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Stock Option Strike (Exercise) Price Explained

The option strike price (also known as the exercise price) is a term used in options trading. Options are derivatives. These financial instruments are ‘derived’ from another underlying security such ...
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Options Trading Strategy: Bull Call Spread

The Bull Call Spread: A Bullish Options Strategy Introduction The bull call spread is a simple strategy that can be used by novice options traders to bet on higher prices ...
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Sell to Open vs Sell to Close

What is Sell to Open vs Sell to Close? We look at these two similar, but not exactly the same, concepts. There are two ways to participate in the options ...
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Options Trading Strategies: Call And Put Backspreads

Backspreads: Extreme Bullish Or Bearish Options Trading Strategies What Are Backspreads? A backspread is very bullish or very bearish strategy used to trade direction; ie a trader is betting that ...
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The Long Box Spread Options Strategy | Risk Free ‘Arbitrage’

The long box spread options strategy involves buying a bull call spread simultaneously with a bear put spread, both of which have similar strike prices and expiration dates of the ...
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Strangle Spread: A Guide To This Options Trading Strategy

The Strangle Spread Options Trading Strategy Introduction Options, and combination trades such as the strangle spread, can be a very useful tool for both novice and seasoned traders and investors ...
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Protective Put: This Defensive Put Option Strategy Explained

How Can The Protective Put Strategy Help A Trader? Introduction To Protective Puts The protective put (sometimes called a married put) strategy is one of the simplest, but most, popular, ...
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Zero Cost (Costless) Collar Explained

What Is A Zero Cost Collar? A costless, or zero cost, collar is an options spread involving the purchase of a protective put on an existing stock position, funded by ...
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Options Greeks: Theta, Gamma, Delta, Vega And Rho

The options greeks - Theta, Vega, Delta, Gamma and Rho - measure option price sensitivity to changes in time, volatility, stock price and other parameters. In the world of finance, ...
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Options Delta Explained: Sensitivity To Price

Options Delta is the measure of an option’s price sensitivity to the underlying stock or security’s market price. It is the expected change in options price with a 1c change ...
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How Options Work: Trading Put And Call Options

Learning how options work is a key skill for any trader or investor wanting to add this to their arsenal of trading weapons. It’s really not possible to trade options ...
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Options Gamma Explained: Delta Sensitivity To Price

Gamma is the options greek measuring the sensitivity of delta to changes in stock price. Option traders tend to find it relatively easy to understand how the first-order Greek metrics ...
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In The Money (ITM) Options Explained

In the money options are those whose strike price is less (for call options) or more (for put options) than the current underlying security price. Options provide the right to ...
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Puts and Calls: Stock Options Explained

What Are Puts and Calls? We've seen before exactly what options are, how they work and their function. Here we go further and explore the two main flavour of options ...
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Best ETFs To Trade Options | ETF Options Perfect For Options Trading

The best ETFs to trade options are those giving the required focused exposure to a part of the stock market and whose ETF options are liquid. Here are some great examples of great ETFs for options trading. US Index ETF Options The first group are ETFs that offer exposure to a wide variety of US […]

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Further Reading On Options Trading...

Options Trading Strategy: Iron Condor

Introduction Options are highly versatile financial instruments. They can be used to bet on market direction, to bet on changes in implied volatility or even to collect premiums. Options can ...
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LEAP Options Explained: What Are They And How Do They Work?

Investors that are looking to make longer-term bets may use LEAP Options. Description of LEAP Options A LEAP option is essentially an option with longer terms than standard options. The ...
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Puts and Calls: Stock Options Explained

What Are Puts and Calls? We've seen before exactly what options are, how they work and their function. Here we go further and explore the two main flavour of options ...
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Options Delta Explained: Sensitivity To Price

Options Delta is the measure of an option’s price sensitivity to the underlying stock or security’s market price. It is the expected change in options price with a 1c change ...
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Put Call Parity

Put Call Parity Introduction Options trading can be relatively simple and can also become highly technical. One of the most important basic concepts when it comes to trading options is ...
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Options Trading Strategy: Long Put

What Is A Long Put? A long put option strategy is the purchase of a put option in the expectation of the underlying stock falling. It is delta negative and ...
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Position Delta | What Is It? How Is It Calculated?

Position delta is the profit or loss of the entire option position relative to a $1 change in the price of the underlying asset. It is usually expressed in dollar ...
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Options Trading Strategy: Butterfly Spread

Introduction To Butterfly Spreads Options can provide traders and investors a tool for expressing different market opinions. Options can be used to make trades based on market direction, to bet ...
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The Synthetic Covered Call Options Strategy Explained

What Is A Synthetic Option Strategy? A synthetic covered call is an options position equivalent to the covered call strategy (sold call options over an owned stock). It consists of ...
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Call Option Payoff

A call option payoff depends on stock price: a long call is profitable above the breakeven point (strike price plus option premium). The opposite is the case for a short ...
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Options Trading Strategy: Bull Call Spread

The Bull Call Spread: A Bullish Options Strategy Introduction The bull call spread is a simple strategy that can be used by novice options traders to bet on higher prices ...
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How Options Work: Trading Put And Call Options

Learning how options work is a key skill for any trader or investor wanting to add this to their arsenal of trading weapons. It’s really not possible to trade options ...
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The Long Box Spread Options Strategy | Risk Free ‘Arbitrage’

The long box spread options strategy involves buying a bull call spread simultaneously with a bear put spread, both of which have similar strike prices and expiration dates of the ...
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Buy to Open vs Buy to Close

What is Buy to Open vs Buy to Close? We look at these two similar, but not exactly the same, concepts. (We have similar post on the opposite trade: Sell ...
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Implied Volatility

What Is Implied Volatility? Implied volatility (IV) is one of the most important concepts in options trading. Unfortunately it’s also one of the most complex. Therefore, let’s build up the ...
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The Best Way To Learn Options Trading

The best way to learn options trading is by combining learning and doing. Learn the principles and theory, and then practice as much as possible. Here’s the process in more detail: 1. Learn Options Principles & Theory Options trading is a complicated beast, and it pays to know as much as possible about the basics […]

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Further Reading On Options Trading...

Straddle Spread: Learn This Options Trading Strategy

Options Trading Strategy: Straddle Spread Introduction The straddle spread is a relatively simple options strategy that can be used under different market scenarios. However its most normal use is a ...
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Out Of The Money (OTM) Options Explained

Out of the money (OTM) options: where the exercise price for a call is more than the current underlying security’s price (or less for a put). This is an example ...
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Options Vega Explained: Price Sensitivity To Volatility

Options Vega is the measure of an option’s price sensitivity to changes in volatility. It is the expected change in options price with a 1 point change in implied volatility ...
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Options Trading Strategy: Bull Call Spread

The Bull Call Spread: A Bullish Options Strategy Introduction The bull call spread is a simple strategy that can be used by novice options traders to bet on higher prices ...
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Volatility Skewness | IV Skew In Options

Volatility skewness, or just skew, describes the difference between observed implied volatility with in-the-money, out-of-the-money, and at-the-money options with the same expiry date and underlying. It occurs due to market ...
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Options Trading Strategy: Butterfly Spread

Introduction To Butterfly Spreads Options can provide traders and investors a tool for expressing different market opinions. Options can be used to make trades based on market direction, to bet ...
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Vertical Spread Options Strategy: Definition And Examples

What Is A Vertical Spread?: Definition A vertical options spread is a combination of bought or sold options of the same underlying security and expiry date (but different strike prices) ...
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Implied Volatility

What Is Implied Volatility? Implied volatility (IV) is one of the most important concepts in options trading. Unfortunately it’s also one of the most complex. Therefore, let’s build up the ...
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Options Trading Strategy: Iron Condor

Introduction Options are highly versatile financial instruments. They can be used to bet on market direction, to bet on changes in implied volatility or even to collect premiums. Options can ...
Read More

Options Gamma Explained: Delta Sensitivity To Price

Gamma is the options greek measuring the sensitivity of delta to changes in stock price. Option traders tend to find it relatively easy to understand how the first-order Greek metrics ...
Read More

LEAP Options Explained: What Are They And How Do They Work?

Investors that are looking to make longer-term bets may use LEAP Options. Description of LEAP Options A LEAP option is essentially an option with longer terms than standard options. The ...
Read More

Strangle Spread: A Guide To This Options Trading Strategy

The Strangle Spread Options Trading Strategy Introduction Options, and combination trades such as the strangle spread, can be a very useful tool for both novice and seasoned traders and investors ...
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Options Rho: Sensitivity To Interest Rates

Rho is the sensitivity of an options's price to changes in interest rates. It is usually only worth considering for long dated options such as LEAPS. Rho is the least ...
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Options Delta Explained: Sensitivity To Price

Options Delta is the measure of an option’s price sensitivity to the underlying stock or security’s market price. It is the expected change in options price with a 1c change ...
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Call Option Payoff

A call option payoff depends on stock price: a long call is profitable above the breakeven point (strike price plus option premium). The opposite is the case for a short ...
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The Sell Put And Buy Call Strategy | A Synthetic Long Stock

The Sell Put And Buy Call Strategy is an example of a synthetic stock options strategy: using call and puts options to mimic the performance of a position, usually involving the purchase of a stock. We saw this when looking at the synthetic covered call strategy elsewhere. In this case, what is being mimicked is […]

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Further Reading On Options Trading...

Options Gamma Explained: Delta Sensitivity To Price

Gamma is the options greek measuring the sensitivity of delta to changes in stock price. Option traders tend to find it relatively easy to understand how the first-order Greek metrics ...
Read More

Options Theta Explained: Price Sensitivity To Time

Options theta measures option price sensitivity to time. Time Decay & Options Theta All things being equal options lose value over time - so called 'time decay' - and theta ...
Read More

Options Trading Strategy: Iron Condor

Introduction Options are highly versatile financial instruments. They can be used to bet on market direction, to bet on changes in implied volatility or even to collect premiums. Options can ...
Read More

The Synthetic Covered Call Options Strategy Explained

What Is A Synthetic Option Strategy? A synthetic covered call is an options position equivalent to the covered call strategy (sold call options over an owned stock). It consists of ...
Read More

Volatility Skewness | IV Skew In Options

Volatility skewness, or just skew, describes the difference between observed implied volatility with in-the-money, out-of-the-money, and at-the-money options with the same expiry date and underlying. It occurs due to market ...
Read More

Protective Put: This Defensive Put Option Strategy Explained

How Can The Protective Put Strategy Help A Trader? Introduction To Protective Puts The protective put (sometimes called a married put) strategy is one of the simplest, but most, popular, ...
Read More

Out Of The Money (OTM) Options Explained

Out of the money (OTM) options: where the exercise price for a call is more than the current underlying security’s price (or less for a put). This is an example ...
Read More

In The Money (ITM) Options Explained

In the money options are those whose strike price is less (for call options) or more (for put options) than the current underlying security price. Options provide the right to ...
Read More

Options Trading Strategy: Bull Call Spread

The Bull Call Spread: A Bullish Options Strategy Introduction The bull call spread is a simple strategy that can be used by novice options traders to bet on higher prices ...
Read More

Options Rho: Sensitivity To Interest Rates

Rho is the sensitivity of an options's price to changes in interest rates. It is usually only worth considering for long dated options such as LEAPS. Rho is the least ...
Read More

Implied Volatility

What Is Implied Volatility? Implied volatility (IV) is one of the most important concepts in options trading. Unfortunately it’s also one of the most complex. Therefore, let’s build up the ...
Read More

Options Spreads: Put & Call Combination Strategies

Options Combinations Explained Options spreads involve the purchase or sale of two or more options covering the same underlying stock or security (ref). These options can be puts or calls ...
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Call Option Payoff

A call option payoff depends on stock price: a long call is profitable above the breakeven point (strike price plus option premium). The opposite is the case for a short ...
Read More

How Options Work: Trading Put And Call Options

Learning how options work is a key skill for any trader or investor wanting to add this to their arsenal of trading weapons. It’s really not possible to trade options ...
Read More

Extrinsic Value In Options Trading

What is Extrinsic Value In Options Trading? The extrinsic value of a stock option contract is the portion of the option's worth that has been assigned to factors other than ...
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Can You Sell A Call Option Before It Hits The Strike Price?

Question To Be Answered: Can You Sell A Call Option Before It Hits The Strike Price?

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Further Reading On Options Trading...

In The Money (ITM) Options Explained

In the money options are those whose strike price is less (for call options) or more (for put options) than the current underlying security price. Options provide the right to ...
Read More

Options Vega Explained: Price Sensitivity To Volatility

Options Vega is the measure of an option’s price sensitivity to changes in volatility. It is the expected change in options price with a 1 point change in implied volatility ...
Read More

Options Spreads: Put & Call Combination Strategies

Options Combinations Explained Options spreads involve the purchase or sale of two or more options covering the same underlying stock or security (ref). These options can be puts or calls ...
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Position Delta | What Is It? How Is It Calculated?

Position delta is the profit or loss of the entire option position relative to a $1 change in the price of the underlying asset. It is usually expressed in dollar ...
Read More

Call Option Payoff

A call option payoff depends on stock price: a long call is profitable above the breakeven point (strike price plus option premium). The opposite is the case for a short ...
Read More

Options Gamma Explained: Delta Sensitivity To Price

Gamma is the options greek measuring the sensitivity of delta to changes in stock price. Option traders tend to find it relatively easy to understand how the first-order Greek metrics ...
Read More

Volatility Skewness | IV Skew In Options

Volatility skewness, or just skew, describes the difference between observed implied volatility with in-the-money, out-of-the-money, and at-the-money options with the same expiry date and underlying. It occurs due to market ...
Read More

Options Delta Explained: Sensitivity To Price

Options Delta is the measure of an option’s price sensitivity to the underlying stock or security’s market price. It is the expected change in options price with a 1c change ...
Read More

Puts and Calls: Stock Options Explained

What Are Puts and Calls? We've seen before exactly what options are, how they work and their function. Here we go further and explore the two main flavour of options ...
Read More

Options Trading Strategy: Long Call

A long call option strategy is the purchase of a call option in the expectation of the underlying stock rising. It is delta and theta positive. Introduction Options can provide ...
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Strangle Spread: A Guide To This Options Trading Strategy

The Strangle Spread Options Trading Strategy Introduction Options, and combination trades such as the strangle spread, can be a very useful tool for both novice and seasoned traders and investors ...
Read More

Options Trading Strategy: Butterfly Spread

Introduction To Butterfly Spreads Options can provide traders and investors a tool for expressing different market opinions. Options can be used to make trades based on market direction, to bet ...
Read More

Options Theta Explained: Price Sensitivity To Time

Options theta measures option price sensitivity to time. Time Decay & Options Theta All things being equal options lose value over time - so called 'time decay' - and theta ...
Read More

Covered Call LEAPs | Using Long Dated Options In A Covered Call Write

The 'Covered Call LEAPs' options strategy is a capital efficient alternative to the more traditional Covered Call, replacing the owned stock with a LEAP call option. What's A Covered Call? ...
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Options Rho: Sensitivity To Interest Rates

Rho is the sensitivity of an options's price to changes in interest rates. It is usually only worth considering for long dated options such as LEAPS. Rho is the least ...
Read More