Options Education Center

  • Bull Call Spread
    The bullish call spread can be created by buying lower strike calls and selling, or shorting, the same number of higher strike calls with the same expiration.  It will cap your profit potential but limit your downside at the same time if the stock does not go up as you expected.
  • Bull Put Spread
    The bull put spread utilizes one long and one short put to profit from a rising market
  • Butterfly Spread
    The butterfly spread is put together to create a low risk, low reward options strategy and is designed to take advantage of a market or stock that is range bound.  The butterfly can be created using call or put options
  • Call Option
    Collar options employ the use of LEAP calls and puts to set up a very low risk/riskless trade.
  • Collar Option Strategy
    A Collar options strategy employs the use of LEAP calls and puts to set up a very low risk/riskless trade.
  • Condor Spread
    The condor spread takes advantage of a range bound stock which will make very small movements untili expiration.  The condor spread utilized four options; all calls or all puts.
  • Covered Call
    A covered call refers to a situation when one is long the stock and short the call.  Covered calls allow the seller to hedge the downside risk of their stock.
  • Intrinsic Value
    The intrinsic value of an option is the difference between the strike price of the option and the current price of the underlying.  There is only intrinsic value if the option is in the money
  • LEAPS
    LEAPS are long term options used by buyers and sellers who want longer term protection
  • Option Greeks
    Option greeks measure the options sensitivity to various risk components inherent to the price of an option. Delta, gamma, theta, vega, and rho measure the speed of the underlying securities price movement, interest rate movement, time decay of an option, and volatility.
  • Options Expiration Week
    Options in one of four security classes will expire every month; stock options, index options, single stock futures, and stock index futures.
  • Options Moneyness
    Options moneyness refers to the stocks price relative to the options strike price.  Options can be In the Money, Out of the Money, or At the Money. 
  • Put Option
    A put option is a contractual agreement between the buyer and the seller of the option that gives the right, but not the obligation, for the put holder to force the seller of the put to purchase the underlying security at the strike price on the options expiration date  
  • Stock Options Introduction
    Options allow the buyer and seller to hedge their risks or speculate on future moves in the underlying security.  Learn about the basics of options at mysmp.com.
  • Straddle Option Strategy
    A straddle is an option strategy that involves buying 2 at the money options, one call and one put with the same strike price.
  • Strangle
    A strangle option strategy is a basic volatility strategy which comes with low risk but will require dramatic price moves to pay out profitably.
  • Strike Price
    The strike price of an option is the exercise price of an option at expiration.
  • Synthetic Calls
    Use synthetic calls to limit the risk of a stock free falling.
  • Underlying Security
    The underlying security is a specific security that is represented by an options of futures contract.  It references the actual stock or commodity.