The premium is the price of an option contract. This amount must be paid to the seller (option writer) when the rights under the option contract are exercised. The premium expires at a specific expiry date of an option contract. It consists of an intrinsic value and time value.
Brutus continuously compares and ranks every option contract and near-endless combination of spreads available on the market in order to bring tailored, relevant options trades to our users – saving time, avoiding emotions, and facilitating the consistency required to succeed in options trading.
Multiple-Criteria Decision Making (MCDM) is a field of mathematics that explicitly analyzes multiple conflicting criteria in decision making. The Brutus Options Ranker uses proprietary adoption of MCDM to rank daily options trades against investors custom trading strategies.
The Risk-free interest rate is the return on investment with no loss-of-capital risk. In practice, this does not exist. In theory, it is an important parameter in option pricing as it sets the baseline price upon which risk premium should be added. A practical estimate to the risk-free interest rate is taken from 'risk-free' bond issued by the government or agency where the default risk is practically zero.
Expiration is the date that the option contract expires. All options contracts are valid for a fixed duration. This is the lifespan of the option where the buyer has the right to exercise the option and the seller has the obligation to fulfill the terms of the option. [click to read more]