Options field guide
All guides · Page 33
Plain-language guides to earnings, implied volatility, option strategies, target prices, and time decay
828 guides
Stationarity, Unit Roots, and Mean Reversion in Finance
Understand strict and weak stationarity, random walks, unit roots, persistence, mean reversion, half-life, spurious regression, ADF and KPSS tests, structural breaks, and financial diagnostics
Read guideStochastic Discount Factor Explained
Learn how a stochastic discount factor prices payoffs across time and states, connects risk premia to covariance, and relates to risk-neutral valuation
Read guideStochastic Exponential and Doléans–Dade Exponential Explained
Understand the stochastic exponential, its jump correction, positivity, martingale tests, measure changes, and role in asset-value dynamics
Read guideStock options vs index options: key differences
Compare stock and index options by underlying, deliverable, multiplier, cash settlement, exercise style, dividends, basis risk, notional size, and expiration.
Read guideStock Repair Options Strategy Explained
Learn the stock repair strategy, its 1-by-2 call structure, lowered break-even goal, capped recovery, continued stock downside, assignment, and expiration risk.
Read guideSuperhedging Price and No-Arbitrage Bounds Explained
Learn how superhedging guarantees claim coverage, creates upper and lower price bounds, and connects incomplete markets to martingale-measure duality
Read guideThe Binomial Option Pricing Model Explained
Learn how a binomial tree uses one-step replication, risk-neutral probabilities, backward induction, and early-exercise checks to value options
Read guideThe Central Limit Theorem in Finance
Understand what the Central Limit Theorem says about standardized sums, which assumptions financial returns can violate, why convergence is not exact, and when square-root-of-time scaling fails
Read guideThe Cornish–Fisher Expansion for Risk Quantiles
Understand how Cornish–Fisher adjusts normal quantiles with cumulants, how it differs from Edgeworth, and why tail risk estimates need monotonicity and stability checks
Read guideThe Maximum Entropy Principle in Finance
Understand entropy maximization under moment and option-price constraints, its exponential-family dual, the role of a reference measure, and the checks needed for an implied distribution
Read guideThe SABR Volatility Model Explained
Learn how the SABR model links a random forward and volatility, how alpha, beta, rho, and vol-of-vol shape the smile, and where its approximation can fail
Read guideThe Synthetic Control Method
Understand donor weights, pretreatment fit, convex-hull limits, placebo inference, spillovers, and how synthetic controls evaluate a policy affecting one market or firm.
Read guideValue at Risk vs Expected Shortfall Explained
Compare VaR and Expected Shortfall definitions, calculations, diversification properties, estimation error, and the backtests needed before using either tail-risk measure
Read guideVariational Inequalities and Free Boundaries in Options
Learn how American option values combine payoff dominance, continuation PDEs, complementarity, free boundaries, smooth fit, and numerical checks
Read guideWhat are the tax straddle rules for options?
Learn how U.S. tax straddle rules can defer option losses, affect holding periods, reach spreads and covered stock, and require Form 6781 records.
Read guideWhat happens if you get assigned without enough money?
Learn what an underfunded option assignment creates, how brokers may handle shares and deficits, why spread protection is not automatic, and what to verify immediately.
Read guideWhat happens to options after a reverse stock split?
Learn why reverse-split options usually keep their strike and multiplier but deliver fewer shares, how to test moneyness, and why adjusted symbols matter.
Read guideWhat happens to options after a rights offering?
Learn how a rights offering can adjust an option deliverable, why the rights deadline matters, and what call and put holders should verify in the OCC memo.
Read guideWhat happens to options after a special dividend?
Learn when OCC adjusts options for a non-ordinary cash dividend, how strike reduction and cash deliverables work, and why regular dividends differ.
Read guideWhat happens to options after a spinoff?
Learn how a corporate spinoff can add distributed shares to an option deliverable, change its symbol and moneyness, and affect covered calls and liquidity.
Read guideWhat happens to options after a stock dividend?
Learn how stock dividends can change option contracts, strikes, share deliverables, fractional cash, covered calls, and expiration pricing under OCC adjustments.
Read guideWhat happens to options after a stock split?
Learn how a forward stock split can change option contract count, strike, deliverable, premium quotes, covered calls, and open orders without creating free value.
Read guideWhat happens to options during a tender offer?
Learn why a tender offer normally does not adjust options, how call exercise and share tendering differ, and what changes after a follow-on merger.
Read guideWhat happens to options if a company goes bankrupt?
Learn why bankruptcy filing does not immediately cancel options, how closing-only and OTC trading work, and what share cancellation can mean for calls and puts.
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