The Natural-Mid Spread for an options contract or spread is the difference in percentage terms between the natural price and the mid-price. The difference between the natural indicates the liquidity of the trade.
A market maker or liquidity provider is a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn. The U.S. Securities and Exchange Commission defines a ‘“market maker’” as a firm that stands ready to buy and sell stock on a regular and continuous basis at a publicly quoted price.
An AON is a type of order which is only executed if it can be filled completely. There need to be enough shares available to fill the order entirely, otherwise, the order is canceled.[click to read more]
The ask price is the most competitive price of stock or an option at which a seller is willing to sell. Conversely, this is the price that the stock or option may be purchased at when a market order is used. [click to read more]
A bear call spread is where a call is sold close to the current underlying price and the risk is fixed by purchasing another call with a higher strike price. A bear put spread is where a put is purchased close to the current underlying price and lower strike put is purchased to reduce the trade cost. [click to read more]
The bid price is the most competitive price for a stock or an option at which a buyer is willing to purchase the asset. Conversely, this is the price that the stock or option may be sold at when a market order is used. [click to read more]
A type of butterfly spread which is skewed to create reward in a single direction within a current range and has risk if the underlying moves in the correct direction, but beyond the expected move implied by current option prices. This is achieved by setting up a normal butterfly spread but then skipping, or moving further out of the money, the final protective put or call. [click to read more]
A strategy of combining bull and bear credit spreads to minimize the risk with the short option of each spread on a single strike price. The profit is also limited due to the increased probability of the trade to profit. Put's or calls can be used for this strategy.[click to read more]
It's a type of Condor Spread where risk/reward profile is skewed in favor of the trader by which no losses occur or a slight credit is taken even if the underlying security goes down substantially. The tradeoff is that if the underlying appreciates beyond the expected [click to read more]