SteadyOptions Trading Blog

Have you ever wanted to invest a sum of money in something not on the stock market? You’re not alone. There are plenty of people out there who love the idea of investing their cash into something great that will grow over time, but not many people know how to do it in a way that gives them a solid return.

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 buy (call options) or sell (put options) a linked underlying security, such as a stock, at some stage in the future at a preset exercise price.

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 of ‘moneyness’ – a concept which considers the strike price of an option in relation to the current stock price.

What are Options Spreads?

An options spread is a strategy involving multiple options contracts of the same type (either all calls or all puts) that are bought and sold simultaneously to capitalize on differences in strike prices or expiration dates.

What is Buy to Open vs Buy to Close? We look at these two similar, but not exactly the same, concepts. There are two ways you can participate in the options market: you can buy or you can sell. This sounds simple enough. Except there’s more to it: when you buy or sell, you can also either open or 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 market; you can either buy or sell. But you can also buy/sell to open or to close. Below we go through what these terms mean and which is the most appropriate.

The Reverse Iron Condor is an options spread opposite to the popular Iron Condor spread. The trade aims to profit from increases in volatility in either price direction while mitigating the risks of unlimited losses. The spread differs from other long-volatility spreads like the long straddle or long strangle in that its upside is capped.

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.

Synthetic positions in options trading is the use of options and/or stocks in order to produce positions that are equivalent in payoff characteristics as another totally different position. So, can we to produce the payoff characteristics of one of the most popular options strategies, the Covered Call, without buying the underlying stock?

What is Vega in Options?

Vega measures how much the price of an option is expected to change per 1% change in the implied volatility of the underlying asset.

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 call. A call option payoff diagram shows the potential value of the call as a function of the price of the underlying asset usually, but not always, at option expiration.

We all know that earnings season can be a volatile time for stocks. But did you know that there are options strategies you can use to trade earnings announcements? In this post, we’ll discuss the five best options strategies for trading earnings announcements.