When the price of the underlying stock is equal to the strike price of the option, the contract is At The Money.
In the image below you can see that the current price of APPL is 139 and the red rectangles are highlighting the fact that the JUL 15th 139.00 Calls & Puts are currently “at the money”
Options Ratio is basically the number of puts traded divided by the number of calls. It can be applied to an individual stock, a sector, an index, or an entire market. Put/call ratios are generally used in contrary manner. For example, when ratios reach extremely high levels, put buying is unusually high and it could…
There are some options settle for cash rather than shares. Indexes like the S&P 500 Index (.SPX) and the S&P 100 Index (.OEX) are examples of cash settled options.
In the index market, it is the value of the index at expiration. For many indexes, the settlement value is computed on Friday morning and, for that reason, the last day to trade some index options is on a Thursday before expiration. See Also: Exercise Price, Automatic Exercise
This is when you own shares in a particular stock and then you sell Calls against it and then buy Puts. You would use this strategy when you think that the stock rice is a little overdone and you are expecting some downside. This has limited risk due to the long put option, but also…
Tracking Options Flow can be very useful if you know how to take advantage of it. It basically allows you to see what the big traders are doing in real time. The common thinking is that these big traders know something that others don’t and are taking a position in anticipation of a move. However,…
Parity is basically a set of rules of equality that exist in the options market. For example, long stock and long puts is the as owning long calls. Parity generally holds, but (all else being equal) puts will often trade at lower prices than calls due to the impact of dividends and interest rates.
