ITM

Nadex Spreads are completely different than Nadex Binaries and determining the moneyness for them is also different. Though the definition for moneyness has the same meaning as the intrinsic value of the option, it is also effected by how close the spread is to the underlying market, or the...

Gamma confuses some options traders because it's a “secondary” indicator. It measures the speed of change in another indicator: delta. Delta measures the rate of premium change in the options related to changes in the underlying (and of course is affected by time and proximity). Gamma measures how...

A delta neutral trade is one in which a long and short option offset one another with net value or cost at or near zero. The theme of delta neutrality can refer to many differently constructed strategies, including spreads (covered and uncovered) and straddles. When an option position is...

Is the backspread always a bear strategy? Most traders think of the put ratio backspread in this way. Why? Because it involves puts. But in fact, it is not a bear strategy, but a volatility strategy. That means its’ designed to turn profitable due to fast point movement in the underlying. The...

Traders often see options as having two kinds of premium -- intrinsic value and time value. But this is not accurate. A third type of premium is where all of the uncertainty lies. Intrinsic value is easy to calculate. It is equal to the number of points the option is in the money. For example,...