When you exercise a call option, the premium you paid for the option is not refunded or adjusted. The premium is essentially the cost of purchasing the option and compensates the seller for taking on the risk of potential price movements in the underlying asset. Exercising a call option means you ar...
Imagine this: You’ve just crafted the perfect options strategy. It’s based on weeks of research, and you believe it’s going to generate significant returns. You’re ready to deploy capital but there’s one lingering question — how do you know it will work? The markets are unpredictable, and without hi...
Rolling a put credit spread on Robinhood is a strategic move that can help you maximize your profits or minimize your losses. Here’s an in-depth guide on how to execute this advanced options trading strategy effectively.Imagine you’ve sold a put credit spread—a strategy where you sell a higher strik...
The ratio call spread option strategy is a popular method used by traders to manage risk and maximize profit potential in the options market. This strategy involves buying a certain number of call options and selling a higher number of call options at a different strike price. The key here is that t...
When it comes to trading volatility options, understanding and executing effective strategies is crucial for maximizing potential gains while minimizing risk. Here's a deep dive into some of the most effective short volatility options strategies, dissected in detail to help you make informed decisio...
Imagine you're walking into a casino, but instead of betting on red or black, you're placing bets on both. Now imagine, instead of betting on a roulette wheel, you're making bets on the unpredictable movement of the stock market. A strangle trade in the options market works much like this. You simul...
Options trading has surged in popularity, with more and more investors seeking to leverage the opportunities that come with the flexibility of buying and selling options. On any given day, there are a multitude of options contracts traded, but there are always certain stocks or assets that see parti...
Imagine you're holding a short strangle position in a volatile market. You've sold both a call and a put option, anticipating that the underlying asset will not move significantly in either direction. But then, market conditions shift unexpectedly. The price starts fluctuating wildly, and your strat...
When it comes to options trading, the Long Butterfly and Short Butterfly strategies are two popular techniques that traders use to manage risk and capitalize on market movements. Each strategy offers unique advantages and is suitable for different market conditions. In this comprehensive guide, we w...
Options expiration day is a critical event in the options trading calendar, bringing a flurry of activity and significant changes to the options contracts. On this day, all options contracts either expire or get settled. The outcomes and processes involved can be complex and impact traders different...
