Options field guide
All guides · Page 20
Plain-language guides to earnings, implied volatility, option strategies, target prices, and time decay
532 guides
Variance vs volatility: the square-root difference that changes pricing
Learn why variance is volatility squared, how each measure aggregates through time, and why VIX, variance swaps, and option risk cannot be compared by simple averages
Read guideVolatility Clustering and GARCH Explained
Learn why calm and turbulent returns cluster, how GARCH updates conditional variance, what persistence means, and why a forecast is not an option signal
Read guideVolatility Cone Explained: Put Current IV in Historical Context
Learn how a volatility cone compares current implied volatility with rolling realized-volatility distributions across horizons, and where that comparison can mislead
Read guideVolatility of Volatility and VVIX Explained
Learn what vol-of-vol measures, how VVIX is built from VIX options, why it differs from VIX, and how second-order volatility risk changes option P&L
Read guideVolatility risk premium explained: implied versus realized volatility
Learn what volatility risk premium measures, why implied volatility can exceed subsequent realized volatility, and why selling options is not free income
Read guideVolatility Skew Carry and Roll-Down Explained
Learn how an option position moves across the volatility surface, what skew carry and roll-down mean, and why spot paths and hedging can reverse them
Read guideVolga or Vomma Explained: How Vega Changes with IV
Learn what Vomma or Volga measures, how it adds curvature to a vega estimate, why its sign varies, and how to aggregate it across an option position
Read guideWhy calls are not always bullish and puts are not always bearish
Understand how buying, selling, opening, closing, hedging, and spread context change the apparent directional meaning of calls and puts
Read guideAdjusted options after splits, mergers, and spinoffs
Learn why corporate actions can change an option deliverable, symbol, strike, multiplier, or expiration and how to verify the new terms
Read guideAmerican vs. European options and settlement
Compare exercise style with physical or cash settlement, and check trading deadlines before holding an option into expiration
Read guideHow dividends and interest rates affect options
See how dividends and rates enter option values, forward prices, early-exercise decisions, and target-price scenarios
Read guideHow to read an option payoff chart
Read axes, break-even points, capped and uncapped regions, and the difference between an expiration payoff and a dated scenario
Read guideImplied volatility term structure explained
Compare implied volatility across expirations, identify event-driven humps and inversions, and avoid treating unlike horizons as one signal
Read guideLong call strategy: risk, reward, and timing
Learn how a long call works, where its expiration break-even sits, and why stock direction alone does not determine the result
Read guideLong put strategy: downside exposure with defined premium risk
Understand a standalone long put, its limited contractual life, expiration break-even, and the conditions needed for a profitable exit
Read guideOptions entry and exit checklist
Check the contract, thesis, sizing, liquidity, events, assignment, target, and invalidation rules before opening an options position
Read guideSell to open vs. sell to close
Distinguish creating a short option obligation from exiting a long option, and verify the position effect before submitting an order
Read guideTheoretical option value vs. market price
Understand what an option-pricing model estimates, what bid and ask prices represent, and why a model output is not an executable quote
Read guideWhat happens to an option spread at expiration?
Understand partial assignment, exercise decisions, after-hours moves, and the stock or cash exposure a multi-leg spread can leave behind
Read guideWhat happens to options during a trading halt?
Understand why closing markets can disappear while exercise and assignment rights or obligations may continue during a stock halt
Read guideWhy option delta is not a guaranteed probability
Understand when delta can serve as a rough probability proxy and why it differs from profit probability, touch probability, and a forecast
Read guide0DTE gamma and expiration risk
Understand why same-day options can change sensitivity quickly and why closing time is not the end of the risk
Read guideBuy to open vs. buy to close
Understand buy to open and buy to close, the decision it supports, and the pricing and execution risks to check before acting
Read guideCalendar spread vs. diagonal spread
Understand calendar and diagonal spreads, the decision it supports, and the pricing and execution risks to check before acting
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