Hedging With Puts And Calls In times of so much so of volatility and uncertainity in the market, some investors prefer turning their ways to hedging using puts and calls versus stock to reduce risk. Hedging can also be promoted by hedge funds, mutual funds, brokerage firms and some investment advisors. Hedging with puts and calls can also be done versus employee stock … [Read more...]
In -The -Money :Option Trading
In the Money is a situation when your stock option is worth money and you can turn around and sell or exercise it for a profit. The strike price of an option compared to the current stock price is what determines the option's Intrinsic Value and hence determines whether the option is in, at or out of the money. If a call option's strike price is less than the current market … [Read more...]
Time Decay Explained
The ratio of the change in an option price to the decrease in time to expiration. Since options are a wasting asset, their value declines over time. As an option approaches its expiry date without being in the money, its time value declines since the probability of that option being profitable (in the money) is reduced. Also known as "theta" and "time-value decay". Time … [Read more...]
Restricted Stock Options [Explained]
Restricted stock, also known as letter stock or restricted securities, refers to stock of a company that is not fully transferable until certain conditions have been met. Upon satisfaction of those conditions, the stock becomes transferable by the person holding the award. Another type of restricted stock is a form of compensation granted by a company. Typically, the … [Read more...]
The Long Gut – Option Trading
The Long Gut Spread is a volatile options trading strategy designed to profit when the underlying stock moves strongly upwards or downwards. The Long Gut Spread is a cousin of the Long Straddle and the Long Strangle with the only difference being that In The Money options are used instead.This strategy is usually used by traders who not sure as the direction of the underlying … [Read more...]