The bid–ask spread is one of the most important option trading concepts as it can have a significant impact on the cost and the potential profit or loss of a trade. The bid-ask spread represents the difference between the lowest price that a buyer is willing...
A put backspread (otherwise called a ratio volatility spread with puts and put ratio backspread) is a three-legged strategy, created by buying two Out of The Money puts and selling one In The Money...
A call backspread (otherwise called a call ratio volatility spread and call ratio backspread) is a three-legged strategy, created by selling one In The Money (or At The Money) call and buying two Out...
The strap is a three-legged strategy, created by buying two At The Money calls and one At The Money put, all with the same strike price and an expiration date. You can also buy...
The strip is a three-legged strategy, created by buying one At The Money call and two At The Money puts, all with the same strike price and an expiration date. You can also buy...
The long guts is a two-legged strategy, created by buying one In The Money call and one In The Money put, both with the same expiration date. The opposite to short guts. When to...
The short guts is a two-legged strategy, created by selling one In The Money call and one In The Money put, both with a same expiration date. When to use this strategy? You are...
The short strangle (otherwise called a sell strangle) is a two-legged strategy, created by selling one Out of The Money put and one Out of The Money call, both with the same expiration date....
The long strangle (otherwise called a buy strangle) is a two-legged strategy, created by buying one Out of The Money put and one Out of The Money call, both with the same expiration date....
The short straddle (otherwise called a sell straddle or a naked straddle sale) is a two-legged strategy, created by selling one At The Money call and selling one At The Money put, both with...