The strike price is the agreed cost per share that the holder may either buy or sell the underlying stock when exercising the contract. The strike price remains the same until the contract expires and is critical in determining the contract's price.
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 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.
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]
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]
Shares are assigned when the option contract holder (buyer) exercises their right to either purchase or sell shares at the agreed strike price. The assignment is sent to the seller who must fulfill the obligation. [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]
A technique of using options in multiple ways to gain profit from underlying stock when it is moving downwards. It is necessary to identify how far the stock will go down and the time frame during which the decline will happen in order to select the optimum trading stra[click to read more]