An option is at-the-money when it's strike price is equal to the price of the underlying. An at-the-money option has no intrinsic value since the strike price and the stock price are the same.
To understand this, it's important to identify how we get to the intrinsic value of an underlying: Strike price - underlying price = intrinsic value. For example, if the strike price is $150 and the underlying price is $148.60, then it's intrinsic value will be $1.40. At-the-money options, therefore, have no intrinsic value.
Setups are a specific combination of options contracts that matches a strategic objective. Setups are sometimes referred to as spreads or "strategies" (not to be confused with a Brutus Options Ranking strategy).
A strategy with an upfront cost (debit) that profits if the underlying (stock) rises in price. This spread involves buying two calls with the same expiration date, but with a different strike price. A bull call spread aims to reduce the upfront cost of buying call options in order to profit from stocks that are expected to rise moderately. [click to read more]
A call options trading strategy in which a neutralized position is established by writing high premium near month out of the money calls and buying simultaneously further month at the money call option contracts to take advantage of time decay of near term calls. The mo[click to read more]
Gamma is an Options Trading Greek which determines the rate of change in option's delta with a 1-point move in the underlying asset. I.e., Gamma describes how Delta is expected to change with moves in the underlying (stock).
An options trading strategy utilized when a trader expects a future range bound market. In this strategy At The Money call contracts of near month are sold and a further month's calls are purchased to take advantage of net time decay value of premiums[click to read more]
An option trading strategy in which credit is received by the trader by writing some In The Money (ITM) or At The Money (ATM) puts against buying more Out of The Money (OTM) puts. With this strategy most gains are made if the underlying stock breaks to downside, and lim[click to read more]
An option strategy which makes money if the underlying decreases in price within an expected range and experiences a loss if the underlying decreases in price beyond the expected range. This position is created by buying an In The Money (ITM) or At The Money (ATM) put [click to read more]
An option strategy which makes money if the underlying decreases or increases in price within an expected range and experiences a loss if the underlying decreases or increases in price beyond the expected range. This position is created by buying an In The Money (ITM) [click to read more]