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Found 7 results

  1. In the ladder option, the full payout is not hinged on one outcome or one strike price. Rather, the payout is broken up and attached to several strike prices, such that the attainment of a strike delivers some degree of payout. This ensures that the trader is guaranteed some measure of profit if even one of the pre-set strike prices is achieved.
  2. A knock-in option stays latent until when the price has exceeded or reached a pre-determined price level. Then the option now begins to function as a true option. If that price is never reached, then the knock-in option is never activated.
  3. The two options located at the middle strike create a long or short straddle depending on whether the options is being bought or written. The "wings" of the butterfly (the options above and below the middle strike) are created by the purchase or sale of a strangle. This strategy is used to protect the trader's position against dramatic rises and falls in price.
  4. The aim of the bear call spread is to benefit from a fall in the price of the asset below the price at which the call options were sold. The premium on the long call minus the premium on the short call is now collected as profit, which is multiplied by the number of shares traded for the final payout.
  5. Compound options usually have a call and put component, with one option being exercised for the purchase of the other. The back fee is the premium that is charged on the second round of the option.
  6. This is used as a hedging strategy. As an example, if a trader purchased an average price put contract of 1,000 barrels of crude when the product is $70 with a view to benefit from rising prices, and the price on expiration is $75, then the average price put payout will be ($75 - $70) X 1,000 barrels = $5,000 (less commissions payable on the trade). If the price on expiration was say $67, then the payout for the trade is zero.
  7. Cyrust2327

    Option Volume

    Hello everyone, I would like to know if volume is important to options. Say i want to sell 100 XYZ at 169, but there is only a volume of 10. What would happen? What if I want to buy 100 and there is only 10 volume. I have looked all over for a answer to this question but have not found an answer.
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