An option is one of the more advanced trading vehicles. Most investors focus on stock trading, but few know of the power that options provides to a trader, or investor. There are two types of options, puts and calls. Put and call options are polar opposites of each other.
We went over the basics of puts and calls in our introduction to options. Now, we want to build on that and cover the option risk characteristics of a call and put.
The term implied volatility refers to an expectation of volatility in the underlying asset from the present till the options expiration, using current options pricing data as a basis. The
Option greeks measure the options sensitivity to various risk components inherent to the price of an option.