Option Greek – Rho
Option Greek – Rho Option Greek – Rho Table of Contents What is Rho ? Rho measures an option’s sensitivity to changes in interest rates – how much option premium will change if the risk-free interest rate increases by one percentage point. Rho is the ratio of option price change (in dollars) to interest rate […]
Option Greek Theta
Option Greek Theta Option Greek Theta Table of Contents What is Theta ? Options generally lose value with passing time. For example, an option which is worth $4.83 today may only be worth $4.79 tomorrow and $4.55 next week, without the market moving. This process is known as time decay. Theta measures the speed of […]
Option Greek Gamma
Option Greek Gamma Option Greek Gamma Table of Contents What is Gamma ? Gamma is closely related to delta – both measure an option’s sensitivity to underlying price, although eachin a different way. While delta indicates how much option premium will change if underlying price increases by $1, gammameasures how much the delta itself will […]
Covered Short Straddle
Covered short straddle Covered Short Straddle Table of Contents Basics Concepts – Covered Short Straddle Description – Covered Short Straddle The concept is to increase the yield of the Covered Call by selling a put at the same strike as the sold call. Covered Short Straddle, we are almost certain to be exercised because we […]
long Iron Condor
long iron condor long Iron Condor Table of Contents Basics Concepts – Long Iron Condor Description – Long Iron Condor The Long Iron Condor is an intermediate strategy that can be profitable for stocks that are range bound. A variation of the Long Iron Butterfly, it is in fact the combination of a Bull Put […]
Option Greek Delta
Option Greek Delta Option Greek Delta Table of Contents What is Delta ? Delta is the most important of the option Greeks. It measures sensitivity of an option’s price (premium) to changes in underlying price. For example, if an option has delta of 0.45, it means that when the underlying stock’s price increases by $1,the […]
VIX – Volatility Index
VIX – Volatility Index VIX – Volatility Index Table of Contents Volatility Index Volatility Index is a measure of market’s expectation of volatility over the near term. Usually, during periods of market volatility, market moves steeply up or down and the volatility index tends to rise. As volatility subsides, volatility index declines. Volatility Index is […]
Options Greeks & Its Interpretations
Options Greeks & Its Interpretations Options Greeks & Its Interpretations Table of Contents Options Greeks The ‘Greeks’ refer to the various dimensions of risk that an options position entails. Greeks are used by options traders and portfolio managers to hedge risk and understand how their P&L will behave as prices move. The most common Greeks […]
Put Call Ratio & Its Interpretations
Put Call Ratio & Its Interpretations Put Call Ratio & Its Interpretations Table of Contents Put Call Ratio The put-call ratio is a measurement that is widely used by investors to gauge the overall mood of a market. If traders are buying more puts than calls, it signals a rise in bearish sentiment. If they […]
Open Interest & Its Interpretation
Open Interest & Its Interpretation Open Interest & Its Interpretation Table of Contents Open Interest Open interest is the total number of outstanding derivative contracts, such as options or futures that have not been settled for an asset. The total open interest does not count, and total every buy and sell contract. Instead, open interest […]