Options Flashcards Preview

Capital Markets > Options > Flashcards

Flashcards in Options Deck (6)
Loading flashcards...

What are the measures of volatility?

Delta, Gamma, Theta, Vega and Rho.


What is a synthetic call?

Created when a trader buys an underlying stock and buys a put as well.


What is a covered call?

Where the trader buys the underlying stock and sells a call.


What is a collar?

An option strategy where a trader who owns the stock or an underlying asset buys a put and sells a call. The profit range is locked in. The loss is limited to the amount paid for the put it less the premium received for the call.


What are the four major types of option volatility?

1) Future volatility, 2) Historical volatility, 3) Forecast volatility and 4) Implied volatility.


What are the steps for understanding a particular transaction?

First, identify who bears the risk. Second, decide what the limitations are on the risk. Also look at what risks are able to be identified in the transaction.