Given that options are a contract that expires at one point or another, the option greek “theta” provides a measure of time decay or the change in an options value with each passing day.  Remember that at expiration, options only contain “real” value as the “time” value...

Earlier, we covered the option greek “Delta“, which measures the change in a positions value with respect to a $1 move in the underlying.  As the “delta” of an option gets closer to +/-100, it behaves more and more like a stock – meaning that it moves $1 for $1.  To push...

This is Part 2/2 of Understanding Options Terminology: 4. ITM – In the money In-the-money (ITM) refers to an option (call or put) that has some intrinsic value. A call option is said to be ITM when the strike price < price of the underlying.  For example, when the underlying is at $60, a 55...

Given the amount of information I would like to discuss, this part has been split into two sections to make it a manageable read.  Options terminology is important to understand because it will allow you to communicate and discuss options with fellow traders as well as brokers when placing/closing...

 The price of any options contract (calls or puts) is measured with respect to the underlying.  Take a look at any option chain and you will notice a pattern.  As strike prices decrease, call options increase in value and put options decrease in value.  Why is this the case? To understand this...