Historically, more than 72% of all option contracts are closed out in the market prior to expiration. Additionally, another 22% expire without value while the remaining 6% get exercised. #OptionsFAQ #FAQFriday bit.ly/3P7me2i

A call option is in-the-money when the current market value of the underlying stock is above the strike price. A put option is in-the-money when the current market value of the underlying stock is below the strike price bit.ly/4aIgTIa #OptionsFAQ #FAQFriday

Yes, to protect or collar a short stock position, an investor could combine a long out-of-the-money call with a short out-of-the-money put. bit.ly/3UbYH3u #OptionsFAQ #FAQFriday

A call option has intrinsic value when the underlying security price is higher than the strike price (in-the-money). bit.ly/3KqUxPo #OptionsFAQ #FAQFriday

Position limits are caps on the maximum number of option contracts one person or group can hold for a specific stock or index. Position limits are set by the exchanges. bit.ly/42qGPnK #OptionsFAQ #FAQFriday

FLEX options allow investors to customize their strike price, expiration date, and exercise styles (American/European) to better fit their investment objectives. bit.ly/48SRXMr #OptionsFAQ #FAQFriday

Gamma risk is the sensitivity of Delta to price movement. Near expiration, small changes in the underlying can cause large swings in Delta—requiring active management, especially for short option positions. bit.ly/3Os4IWn #OptionsFAQ #FAQFriday

A call option gives the buyer the right (but not the obligation) to purchase the underlying asset, while a put option gives the buyer the right (but not the obligation) to sell it—both at a predetermined strike price on or before expiration. bit.ly/3BpzM5k #OptionsFAQ #FAQFriday

Expiration is when an option contract ends. Exercise happens when the holder chooses to fulfill their right to buy or sell the underlying asset before or at expiration. bit.ly/3P7me2i #OptionsFAQ #FAQFriday

Depending on your brokerage’s policies, an in-the-money option may be automatically exercised, while an out-of-the-money option typically expires worthless. bit.ly/3P7me2i #OptionsFAQ #FAQFriday

Equity options are almost always American-style, meaning they can be exercised any time on or before expiration. Index options are typically European-style, meaning exercise (or assignment) can occur only at expiration. #FAQFriday #OptionsFAQ

Dividends lower call option prices and raise put option prices as the underlying security drops by the amount of the dividend on the ex. dividend date. bit.ly/4nxI79s #OptionsFAQ #FAQFriday

Options volume shows how many contracts were traded within a specific period, while open interest shows how many contracts remain open in the market. bit.ly/3WkUn25 #OptionsFAQ #FAQFriday

Gamma scalping is the process of adjusting stock positions to profit from price swings while holding options, using Delta changes to capture gains. bit.ly/3Os4IWn #OptionsFAQ #FAQFriday

An options Delta shifts when IV changes: higher IV pulls all Deltas towards 50 while lower IV pushes them to 0 or 100 depending on the options moneyness. bit.ly/41dHXfN #OptionsFAQ #FAQFriday

As the strategy is one long contract and short two, Theta has a positive effect on the position. At expiration, options retain only their intrinsic value, which aligns with the stock repair structured limited payoff potential. bit.ly/4kgwTVi #OptionsFAQ #FAQFriday

European-style contracts are exercisable only at expiration, unlike American-style options, which can be exercised any trading day on or before expiration. bit.ly/4365osn #OptionsFAQ #FAQFriday

It’s the settlement cycle of trade date plus one business day—the time from execution to when securities are delivered to a buyer’s account and cash to the seller’s account will occur one business day after the trade. bit.ly/4cZ1wLx #OptionsFAQ #FAQFriday

Stock price, strike price, time to expiration, implied volatility, interest rates, and dividends if any. bit.ly/3SL9Zuz #OptionsFAQ #FAQFriday

A long call combined with a short put of the same strike and expiration. bit.ly/3IMMLBN #OptionsFAQ #FAQFriday