Long Straddle
A long straddle is a strategy that enables the holder of an option to make a profit based on the movement of the underlying asset, regardless of the direction of that movement. To employ a long straddle strategy, More...
Transactions Cost & Slippage
As in any industry that involves agents with specialized skills and licenses, there are transaction costs in trading. These transaction costs include fees and commissions that must be paid to banks and brokers for More...
Specialist
A specialist is a member of an exchange who is responsible for facilitating the trading of a particular stock by holding an inventory of the stock, displaying the best bid and ask prices for their stock, managing More...
Risk
Risk in trading is the probability that an investment will lose money. While high-risk investments can sound intimidating for beginning investors, they can reap very high rewards for the knowledgeable and experienced More...
Put Ratio Spread
A put ratio spread is a limited profitability, unlimited risk strategy that is often undertaken when the investor believes that the stock will have low volatility. A put ratio spread means buying a number of options More...
Hedging
A hedge is an investment strategy used to attempt to offset any potential losses. One way an investor can do this is to either sell futures on a stock they own, stating they will sell that stock at a certain price. More...
Options Regulators
The OIC is the Options Industry Council. The OIC is a non-profit association intended to provide education and resources to investors in the form of educational videos, literature, software, seminars, and a call More...
Option Pricing Model
An option pricing model is any theory or model used to mathematically calculate the price for an option contract. Two of the most important factors used in determining option price are the length of the contract More...
Open Interest
Open interest refers to the number of futures or options contracts that are not delivered or closed on a particular day. In other words, this is the number of contracts that have been traded but have not yet been More...
Naked Option
A naked option is when the seller of an option contract sells call options without owning the underlying assets or securities. If the option is purchased for a certain price and the actual stock price has dropped, More...