# Options Pricing Model

## Options Trading: Understanding Option Prices

There are two types of directional option contracts: calls and puts. Call options are contracts that move higher in price when the underlying stock moves higher. Put options are contracts that move higher in price when the underlying stock moves lower. To enter an option position you can either buy to open a long option […]

## What is Implied Volatility in Options?

What is IV in Options? In Black–Scholes option pricing model, the implied volatility or IV of an option contract is the cost embedded in the option of the volatility of the underlying instrument that it is being valued against. Volatility is the input in an option pricing model that measures when an asset will likely

## Black Scholes Calculator

How to calculate an option price A Black-Scholes Calculator can be used to figure the price (fair market value) of a put or call option contract based on the Black-Scholes pricing model. It also calculates and plots the Greeks: Delta, Gamma, Theta, Vega, Rho. Enter your own values through the website in the link below

## Call Options in the Money Definition

Call options are in the money when the underlying stock that it is written on has a price higher than a the call option strike price. A call option can be used to call away a stock at the price of the strike with the profits being how much higher the stock was trading at

## Delta of a Stock

The delta of a stock is always 1.00 because delta is the variance of movement of a stock versus an option contract. The delta of an option is the magnitude of the move in the underlier that the option will capture currently based on the odds of the option expiring in-the-money. Delta quantifies the amount

## OTM Options Explained

OTM is short for out of the money in options trading. This refers to the moneyness of an option contract, the relationship of the current price of the underlying asset to the strike price of a call or put option contract written on that asset. An out-of-the money option has a strike price far from

## Option Delta Explained

What is delta in options? The delta of an option is part of the option Greek pricing model and prices in the magnitude of the move in the underlier that the option will capture based on the odds of the option expiring in-the-money. Option delta is represented as the velocity of a price change in

## What Is a Gamma Squeeze?

A “squeeze” is price action that is so strong in one direction that it forces traders and investors to change their market positions based on moves going too far against them. The momentum that causes traders to exit or reverse their positions can start a feedback loop that feeds on itself making the move bigger

## Max Pain Calculator for Options

Maximum pain for an options chain can show the option trader the expiration date price that will cause the option buyers to lose the most money. The max pain level is the strike price with the highest volume of open contract put options and call options for a set expiration date. The maximum pain price

## What is Implied Volatility Crush? (IV Crush)

Implied volatility or IV crush are descriptions for when an options vega premium dropped dramatically out of its pricing. This usually happens after a major event has passed for the underlying stock or market for the option contract. The most common time to see IV crush in a stock option is after an earnings announcement