options fundamentals
Educational articles in this subcategory.
Understanding Moneyness and Delta Exposure
# Understanding Moneyness and Delta Exposure Moneyness describes where an option's strike price stands relative to the current price of the under...
Tax Considerations for Equity Options
# Tax Considerations for Equity Options Options trading creates taxable events that differ from stock transactions. Understanding when taxes appl...
Risk Disclosures Required Before Trading
# Risk Disclosures Required Before Trading Before trading options, regulations require brokers to provide risk disclosure documents and verify su...
Reg T and Portfolio Margin Treatment
# Reg T and Portfolio Margin Treatment Margin rules determine how much capital you need to trade options. Regulation T (Reg T) provides standard ...
Physical vs. Cash Settlement Differences
# Physical vs. Cash Settlement Differences Options can settle in two ways: through physical delivery of the underlying asset or through cash paym...
Options on ETFs vs. Single Stocks
# Options on ETFs vs. Single Stocks Exchange-traded fund (ETF) options and single-stock options share the same mechanics but differ in volatility...
Option Symbology on US Exchanges
# Option Symbology on US Exchanges US-listed equity options use a standardized ticker format established by the Options Clearing Corporation (OCC...
Option Contract Specifications: Strike, Expiry, Style
# Option Contract Specifications: Strike, Expiry, Style Every option contract is defined by three critical specifications: the strike price, the ...
Option Chain Layout and Key Stats
# Option Chain Layout and Key Stats The option chain displays all available options for an underlying asset, organized by expiration and strike p...
Open Interest and Volume Signals
# Open Interest and Volume Signals Volume and open interest provide insight into market activity and positioning. Volume shows today's trading ac...
Mini, Weekly, and Quarterly Options Explained
# Mini, Weekly, and Quarterly Options Explained Beyond standard monthly options, exchanges offer products with different expiration frequencies a...
LEAPS and Long-Dated Contracts
# LEAPS and Long-Dated Contracts Long-Term Equity Anticipation Securities (LEAPS) are options with expiration dates extending one to three years ...
Intrinsic Value vs. Time Value
# Intrinsic Value vs. Time Value Every option premium consists of two components: intrinsic value and time value (also called extrinsic value). U...
Glossary: Options Fundamentals
# Glossary: Options Fundamentals This glossary provides concise definitions for essential options trading terminology. Terms are organized alphab...
Corporate Action Adjustments to Options
# Corporate Action Adjustments to Options Corporate actions like stock splits, mergers, and special dividends can significantly alter the terms o...
Clearing and OCC Guarantees
# Clearing and OCC Guarantees The Options Clearing Corporation (OCC) acts as the central clearinghouse for all US-listed options. By becoming the...
Call vs. Put Options: Payoffs and Use Cases
# Call vs. Put Options: Payoffs and Use Cases Options contracts provide the right, but not the obligation, to buy or sell an underlying asset at ...
Basic Option Pricing Drivers
# Basic Option Pricing Drivers Option prices reflect six fundamental inputs: underlying price, strike price, time to expiration, volatility, inte...
Assignment, Exercise, and Expiration Logistics
# Assignment, Exercise, and Expiration Logistics When an option holder exercises their right, the Options Clearing Corporation (OCC) randomly ass...
American vs. European Exercise Rights
# American vs. European Exercise Rights Option exercise style determines when the holder can convert the option into its underlying position. Thi...