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options

A collection of 27 issues

What Is a Call Option Assignment? A Complete Guide for Traders

Introduction Options trading opens the door to flexible strategies, but it also introduces specialized terminology that can confuse new and even experienced traders. One phrase that often raises eyebrows is “call option assignment.” Understanding what a call option assignment is, how it happens, and what it means for both buyers

Cash-Secured Puts: A Beginner-Friendly Income Strategy

Introduction to Cash-Secured Puts Many investors search for ways to generate reliable income without taking on huge amounts of risk. One underrated yet beginner-friendly tactic is the cash-secured put (CSP). By selling a put option while holding enough cash to purchase the underlying shares if assigned, you can collect option

Intro to Options: Calls, Puts, and Covered-Call Income

Understanding Options: A Quick Overview Options are versatile financial contracts that give the holder the right, but not the obligation, to buy or sell an underlying asset—usually a stock—at a predetermined price within a specified period. Because options allow traders to control shares for a fraction of the

What Is a Put Option? Definition, Examples & Benefits

Introduction to Put Options A put option is a financial contract that gives the buyer the right, but not the obligation, to sell an underlying asset at a predetermined strike price before or on a specified expiration date. In options trading, puts are popular for hedging and for profiting from

Out-Of-The-Money Option: A Comprehensive Guide

What Is an Out-Of-The-Money Option? An out-of-the-money (OTM) option is a call or put contract whose strike price is unfavorable compared with the current market price of the underlying asset. For a call, the strike lies above today’s spot price; for a put, the strike sits below it. Because

What Is Open Interest and Why It Matters in Trading

Understanding Open Interest Open interest is the total number of outstanding derivative contracts—such as futures or options—that have not been settled. Unlike volume, which resets daily, open interest is cumulative, updating when new contracts are opened or old ones are closed. This metric offers deep insight into market

Understanding Naked Option Strategies: Risks & Rewards

Definition of a Naked Option A naked option, also called an uncovered option, is an options contract sold without owning the underlying asset or holding an offsetting position. Because the writer lacks collateral, potential losses can be theoretically unlimited if the market moves sharply against the position. Naked Call Explained

What Is a Listed Option? Definition, Benefits & Trading Guide

Introduction to Listed Options A listed option is a standardized contract traded on a regulated exchange, such as the Chicago Board Options Exchange (CBOE), that grants the buyer the right—but not the obligation—to buy or sell an underlying asset at a fixed strike price before a specified expiration

Understanding the Knock-Out Option in Financial Derivatives

Introduction A knock-out option is a type of barrier option in which the contract automatically expires worthless once the underlying asset reaches a pre-specified price level, known as the knock-out barrier. Popular with traders who want limited premium costs, this exotic derivative provides structured exposure to markets while embedding a

Understanding Knock-In Options: Definition, Types, and Trading Strategies

What Is a Knock-In Option? A knock-in option is a type of barrier option that only comes into existence if the underlying asset’s price reaches a pre-specified level, known as the knock-in barrier. This structure allows traders to obtain contingent exposure while reducing upfront option premiums. Because the contract