The strike price is the agreed cost per share that the holder may either buy or sell the underlying stock for when exercising the contract. The strike price remains the same until the contract expires and is critical in determining the contract's price.
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 put option contract gives the owner the right (but not the obligation) to sell 100 shares of the asset at the strike price any time before expiration. If you sell a put option, you have the obligation to purchase those 100 shares from the owner.
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]
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]
When the right of an option was exercised by the investor, proceeds are delivered in a cash settlement rather than the underlying asset. The investor does not take physical possession of an underlying in this case, but conveniently receives a cash transfer equivalent to the strike price of the option.[click to read more]