What determines the Option Price and Value

There are several factors that determine the option price of a contract. Most traders are trying to take advantage of directional moves in the underlying stock, and that is the primary driver of the price of an options contract, especially its intrinsic value. But the extrinsic value of an option, also known as its time value, is affected by time […]

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The Mystery of Option Extrinsic Value

Once you understand how extrinsic value interacts with intrinsic and time value of an option, you are better suited to select underlying stocks most suitable for your strategy, and to manage stock and option risks more effectively. We like to sell options in order to receive option premium. Option premium contains three different components, each one has its own unique […]

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What is Option Moneyness

In the world of options trading, Moneyness is used to describe the relationship between the current trading price of the security and the strike price of the option For Traders who are buying or selling options is important to know how far an option is ITM or OTM. Whether an option is in-the-money or out-of-the money it tells the holder […]

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Selling puts for huge income

Selling puts is an essential part of options strategies. Selling a put is a strategy where an trader writes a put contract. By selling the contract the put buyer has the right to sell stocks for a certain price. Selling options is advantageous to an trader, because the option trade has a higher probability of profit and she will receive […]

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What is a stock option

Stock Option Contracts comes in several ways. In a typical option contract, the seller agrees to keep an offer open for a certain amount of time. A potential buyer has to give the seller some payment in exchange. In other words in an option contract, the seller is agreeing to keep the “option”open for the buyer. An option contract gives […]

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What is the Cost Basis

cost basis

Cost Basis can be best explained by the use of an everyday live example. Imagine that you are a broker who buys a house, renovate it and sell it for a higher amount. You have purchased the house for a certain amount of money. After that you will buy some paint and wall paper to do a make over. Then […]

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Your first Option Trade

What did we consider when we made our first trade? We trade options because they have better odds to realise a profit than with stocks. You have to look for the right  opportunities and have to decide whether we buy or sell options. We also look at other factors as Volume, liquidity, Implied Volatility, and Probability of Profit before we […]

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