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"Six primary factors influence option pricing: the underlying price, strike price, time until expiration, volatility, interest rates and dividends." You can read a bit about it here: https://www.investopedia.com/university/options-pricing/option-price-influence.asp

That's true but if you're selling $1 wide credit spreads for a 13 cent credit, odds are that the short strike is a fair amount OTM and you have some buffer until it comes into play. Only a huge gap that drives the options to parity will cause that maximum loss so I don't think it's a dire as...

In some cases, if I sell the stock and convert to a bearish call spread, I'll also sell OTM puts at the short call's strike in an equal number. The put premium brought in will partially offset the loss on the call spread if the underlying continues up. If it drops, you capture the intrinsic...

When you sell an option, the amount is credited to your account. You now have a contractual obligation and at expiration, you'll find out how much of that credit you get to keep. If it's a covered call position, the credit is all yours. At that time, it's the underlying that may or may be...

A vertical is a risk defined strategy. A short put has an imbalanced R/R ratio since a loss could be anything (down 2, 5, 10, 25 pts ?). A vertical shifts the R/R closer to even and has a lower margin requirement. Prior to expiration, the vertical will lose less than the short put...

Verticals are more difficult in that they involve more legs. I have no idea if you are trying to compare different verticals and why you are averaging them, or what. You might want to be more specific in order to make it easier to understand what you are asking. Include the specifics of the...

That's it in a nutshell.

Spreads aren't difficult to manage. If you're comfortable selling a short put, the long put is just crash protection. AFAIC, modeling IV and Greeks isn't that important for verticals since though not equal, IV change affects both legs so they offset to some extent. If you're trading some...

Not sure that I follow you. If you sell an OTM covered call and the stock rises well above the strike, the call appreciates and it could have a significant loss. Net net, it doesn't matter since whatever intrinsic value the short call has (loss) is offset by the stock's appreciation above the...

With naked puts, most of the time you eat like a bird and occasionally, you sh*t like an elephant. That's not the case with a vertical since the long leg is a limiting factor. Rolling spreads incurs more frictional costs but they're not difficult to manage. If I have a vertical that moves...

With vertical spreads, if it's a debit spread, that's the risk and the reward is the difference in strikes less the debit cost. For credit spreads it's the opposite. The reward is the credit received and the risk is the difference in strikes less the credit. In terms of the amount of premium...

No need to apologize for elementary questions. We all start somewhere. It makes no sense to carry the risk of a short option when there's a further profit potential of two cents more so closing it is the right thing to do. Doing so opens up the possibility of either running with the...

LOL. You just edged me out. My oldest computer is a Dell Inspiron 530 which is 10 years old. I use it because of a routine that I wrote that parses and massages a lot of EOD data and puts it into 40-50 spreadsheets in well under 5 minutes. I was devastated last month when it died but I got...

My suggestion only looks good because SQ dropped $9. Had it risen $9, your $30 call or the subsequent $60 call would have performed much better and you'd be $@^&*#(%!!-ing at me for having suggested the collar :->) I'm risk averse so I always lean toward booking gains and lowering risk. It...

Here's a follow up on the Jun 45p/60c collar suggestion. With SQ dropping from $49 to $40, your former Jan '19 $30 call lost about $8. At the same time, the Jun 45p/60c collar gained $6 at the natural. Since the B/A spreads are Holland tunnel wide, if so inclined to adjust again, you might...

The key word there is 'following'. You find a trend, you take your position and you hope that the trend continues --> follow. Indicators predict nothing.

Technical analysis indicators are a reflection of past price and/or volume movement. They can provide information like support and resistance, trend and momentum but they predict absolutely nothing. People talk a good game about different indicators but when you utilize them in real time...

Pending dividends increase the amount of put premium and decrease the amount of the call premium. The dividend is priced in. But you didn't know that, right? The trading working out has nothing to do with the discussion of the equivalence of a short put and a buy/write of the same series...

Thank you for not attempting to educate me (and others). People like you with so many misconceptions are a danger to those who are learning about options. What's ironic is that everyone here replying to you is disagreeing with you. That would tell you something if you were capable of...

You provided the answer to your question: "the delta is practically 98%" - so it's going to behave like long stock. What other option strategy gives you that high of a delta yet lets you book some of your profit, reducing risk? None. In this situation, I would have taken a good look at a...