Option Volume & Open Interest Explained One of the things every options trader should do before entering a position is gauge the amount of trading activity in the options they wish to trade. Failing to run a quick liquidity check can leave an options trader stranded in a position, forced to exit at an unfavorable […]
The Bid-Ask Spread (Options Trading Guide)
The Bid-Ask Spread Explained In this guide, you’re going to learn about the bid-ask spread, which is a crucial liquidity metric that should be examined before trading any stock or option. If you’d like, you can skip to a particular section by clicking on the section title. Before trading any product in the market, it’s crucial […]
Intrinsic & Extrinsic Value Explained (Options Trading)
Option Intrinsic & Extrinsic Value Explained Every option contract has a price, and the price consists of two components: Here’s a quick visualization of an option’s price components: What are intrinsic and extrinsic value? An option’s intrinsic value can be conceptualized as the value of being able to buy or sell shares at the option’s strike […]
What Are Options? | Basics of Puts and Calls
What Are Options? The Basics of Call Options & Put Options What are options? To give you the textbook definition, options are financial contracts that give the holder (buyer) the ability to buy or sell 100 shares of stock at the option’s “strike price” at or before expiration. The seller (writer) has the obligation to […]