Out of the money options strike prices (OTM) are strikes that trade above or below the current price of the stock. These strikes are the cheapest because they trade below the price of the stock on the put side. They trade above the price of the stock on the call side. The deeper out of…
In the money options strike prices (ITM) are strikes that trade above or below the current price of the stock. These strikes are the most expensive because they trade below the price of the stock on the call side. They trade above the price of the stock on the put side. The deeper in the…
At the money options strike prices (ATM) are strikes that follow the closest to the current price of the stock. When looking at an options chain, look for the strike price that’s closest to the price of the stock and that would be the ATM strike. Options strikes make up one of the most critical…
What is an options strike price and how do they work? Strike prices make up one of the most fundamental components of an options contract. There are in the money, out of the money and at the money strikes to choose from. In the money contracts are more expensive because they are below the current…
Support and resistance trading is the most important aspect to becoming a successful trader. Look for previous highs and lows on a stock chart then find where current price action is and then draw your trendlines. Fundamental analysis is also key, however, knowing the levels on where to buy and sell is the critical component…
What does time decay options also known as theta mean? It measures the rate of the decline of an options contract with the passage of time. Options contracts are decaying assets that have an expiration date. Time eats away at an options contract each day that goes by. It is a widely discussed fact that…
Extrinsic value is one of the main components to options trading. It measures the difference between the market price of an options contract, which is the premium, and its intrinsic value. It is one of the moving parts in options. Extrinsic value is, in essence, value from the outside. Options give you the right but not the…
Watch our video on how to calculate the intrinsic value of a stock. How to Calculate the Intrinsic Value of a Stock We use a handy resource called Investopedia for definitions and how to calculate it. They define intrinsic value as the actual value of a company or asset based on an underlying perception of…
Looking for how stock options work? They give you the right but not the obligation to buy or sell shares of a stock for a specific price by a certain expiration date. Each options contract controls 100 shares of the stock. Options give traders the ability to buy and sell the contract by itself, or…
The (P&F) point and figure chart plots a stocks price movement without the passage of time. P&F charts are made up of X’s and O’s. The X ‘s are rising prices. While the O’s are representing falling prices. They’re housed in price boxes. Each price box represents a specific price that has to be reached…
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