9/23/2023 0 Comments Pt in stock lingoTheta is the Greek value that indicates how much value an option will lose with the passage of one day's time.Vega is a Greek value that indicates the amount by which the price of the option would be expected to change based on a one-point change in implied volatility.Gamma is the speed the option for moving in or out of the money. Gamma can also be thought of as the movement of the delta.The price of a 30-delta option will change by 30 cents if the underlying security changes its price by $1. Delta also measures the option's sensitivity to immediate price changes in the underlying. For instance, a 30-delta option has roughly a 30% chance of expiring in the money. Delta can be thought of as a probability.Open interest decreases as open trades are closed. An Open Interest (OPTN OP) number indicates the total number of contracts of a particular option that have been opened.This value is calculated by an option-pricing model such as the Black-Scholes model and represents the level of expected future volatility based on the current price of the option. Implied Bid Volatility (IMPL BID VOL) can be thought of as the future uncertainty of price direction and speed.The "ask" price is the latest price offered by a market participant to sell a particular option.The "bid" price is the latest price level at which a market participant wishes to buy a particular option.Volume (VLM) simply tells you how many contracts of a particular option were traded during the latest session.They are taxed at a long-term capital gains rate. They are taxed at a short-term capital gains rate. They can be American- or European-style options. LEAPs expire in January and investors purchase them to hedge long-term positions in a given security. They are generally used as a proxy for holding shares in a company and with an eye toward an expiration date. They are generally used during catalyst events for the underlying stock’s price, such as an earnings announcement or a major news development. They are generally underpriced because it is difficult to estimate the performance of a stock far out in the future. They are more expensive compared to short-term options. The main component of risk in holding LEAPs is an inaccurate assessment of a stock’s future value. The main component of holding long-term options is the use of leverage, which can magnify losses, to conduct the trade. The main risk component in holding short-term options is the short duration. Time value decay is minimal for a relatively long period because the expiration date is a long time away. Time value does not decay as rapidly for long-term options because they have a longer duration. Time value and extrinsic value of short-term options decay rapidly due to their short durations.
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