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Options pricing

20 entries filed under this topic
9 min read
Two position cards either side of an amber equals sign: a covered call that owns 100 shares at $50.00, sells the $50 call for $2.40 and totals $52.40 when the stock closes at $50, and a cash-secured put that reserves the $50 strike, sells the $50 put for $1.41 and totals $51.41, with the identity S minus C equals PV(K) minus P underneath and the $0.99 gap labelled as the interest on the reserved cash against PV(K) of $49.01.

Put call parity: why a covered call and a cash-secured put are the same trade

Put call parity links call and put prices at one strike. See why a covered call and a cash-secured put produce the same payoff, with a worked example.

PremiumGuard Research Deskoptions pricingcovered callswheel strategy
8 min read
A price rail marking the stock at $100, a sold $95 put collecting $2.10 and a bought $90 put costing $0.80, with the $5.00 strike width shaded between the two strikes, a net credit of $1.30 or $130 per contract, and a max loss of $3.70 per share or $370 per contract.

Credit spreads: defined-risk income for wheel traders

A credit spread caps your loss before you place it. How the two legs work, and how to read max profit, max loss and breakeven off two strikes and one credit.

PremiumGuard Research Deskincomeoptions pricingcapital
11 min read
An option premium of $4.50 per share split into a bar showing $2.00 of intrinsic value and $2.50 of extrinsic value, with the per-contract total of $450 on a stock at $102 against a $100 strike.

How option premium is calculated: intrinsic plus extrinsic value

Option premium splits into intrinsic value and extrinsic value. Here is the formula, the four forces that move it, and a worked example on both sides.

PremiumGuard Research Deskoptions pricingincomewheel strategy
11 min read
A covered call payoff built from two parts: a rising stock line, a short call line that sits flat until the strike and then falls, and the combined payoff that climbs to the strike and then runs flat along an amber ceiling.

Covered call payoff diagram: how to read the chart

A covered call payoff diagram plots profit and loss at expiration. Learn to read breakeven, maximum profit and maximum loss straight off the kinked line.

PremiumGuard Research Deskcovered callsoptions pricingcost basis
9 min read
A roll shown as two trades on one timeline: buy to close the old contract on the left, sell to open the new contract on the right, with the net formula reading new premium minus cost to close minus fees, and a fork marking net credit as cash in and net debit as cash out.

What is rolling an option? The reset button that isn't

Rolling an option is two trades, not a reset. Here is the net credit math behind a roll and the three checks that stop a bad roll becoming a worse one.

PremiumGuard Research Deskoptions pricingassignmentwheel strategy
10 min read
Covered call payoff chart for 100 shares bought at $40 with a $45 call sold for $1.00; the amber line rises to a ceiling of $600 at the $45 strike while the dashed stock-only line keeps climbing, with breakeven marked at $39 and premium collected of $100.

What is a covered call? The payoff explained simply

A covered call means owning 100 shares and selling someone the right to buy them at a set price. Here is the payoff, the breakeven, and what the cap costs.

PremiumGuard Research Deskcovered callsassignmentoptions pricing
18 min read
A single brass key resting on navy ledger paper beside a closed brass padlock, lit from the upper left, standing for the right to act without the obligation to use it.

Options trading for beginners: what a contract is and how to place your first trade

Options trading for beginners without the Greeks: what a contract is, how to open and close one, and a learning order that skips what wrecks new accounts.

PremiumGuard Research Deskoptions pricingassignmentcapital
17 min read
A dark panel listing the five steps from account approval to a filled order, beside an order preview showing buy to open, 1 contract, limit 1.21, contract multiplier 100, and an estimated cost of $121.00.

How to trade options: a step-by-step walkthrough of your first order

How to trade options, step by step: get the account approved, size one contract in dollars, read the chain, and place an order that actually fills.

PremiumGuard Research Deskoptions pricingassignmentcovered calls
18 min read
A brass contract seal resting half in amber light and half in deep navy shadow, with a single clock hand crossing it, standing for an agreement that carries a deadline.

What is options trading? Calls, puts, and why traders use them

Options trading explained in plain terms: what a contract is, how calls and puts differ, what moves premium, and why traders use them.

PremiumGuard Research Deskoptions pricingassignmentincome
18 min read
Four narrowing filter bars for a cash-secured put screen, reading liquidity and spread at OI 100+ with a tight spread, delta or distance at 0.15 to 0.30 delta, IV Rank minimum at IV Rank 30+, and earnings and events at none before expiry, feeding an amber assignment comfort card marked pass or fail.

Cash secured put screener: how to screen stocks without chasing junk premium

A four-filter cash secured put screen that turns a messy watchlist into a short list of liquid, ownable contracts, plus the test no screener can run.

PremiumGuard Research Deskassignmentoptions pricingwheel strategy
14 min read
Gamma plotted across strikes for a stock at 100 dollars with a 98 strike marked: the final-week curve spikes into a tall amber peak right at the strike while the three-weeks-out curve stays low and flat across the same strikes, with the two drivers labelled at the money and final week.

What is gamma in options? The risk that turns a quiet wheel trade into a fast one

Gamma measures how fast delta moves. Why it spikes at the money in the final week, what short gamma does to a wheel position, and how to read it.

PremiumGuard Research Deskoptions pricingwheel strategyassignment
23 min read
Dark navy card titled Four numbers, one position, listing a short 50 strike put sold for 1.20 with credit per share 1.20, capital tied up 5,000.00, breakeven 48.80, profit at expiration 120.00 and return on capital 2.4 percent.

How to calculate options profit and loss the right way

How to calculate options profit: true cost basis, breakeven, dollars at expiration, and annualized return on capital for calls, puts and the wheel.

PremiumGuard Research Deskoptions pricingcost basiswheel strategy
11 min read
Editorial illustration of a brass jeweler's loupe resting on a dense navy grid of blank ledger cells, with a single row beneath the lens lit amber, representing reading one row of an options chain closely.

How to read an options chain: a row-by-row SPY walkthrough

Learn how to read an options chain row by row: bid, ask, spread, volume, open interest and delta, using SPY as the worked example.

PremiumGuard Research Deskoptions pricingwheel strategy
14 min read
Delta plotted across strikes for a stock at 100 dollars, with call delta running from near 1.00 deep in the money down through 0.50 at the money to near 0.00 far out of the money, and put delta mirrored below the axis from near 0.00 down to negative 1.00, with the at-the-money coin-flip point marked at 0.50 and negative 0.50.

What is delta? The number that tells you your assignment odds

Delta gives premium sellers a rough read on assignment odds. How to read it on a chain, why it moves, and what it costs you to sell far out of the money.

PremiumGuard Research Deskoptions pricingassignmentwheel strategy
11 min read
A seller's breakeven plotted as a stepped line across one wheel cycle, dropping from 48.80 dollars after the cash-secured put to 47.90 after the covered call and 47.65 after a credit roll, then rising to 48.05 after a debit roll, all held below a flat dashed reference line at the 50.00 dollar assignment strike, with the buyer's fixed strike-plus-premium formula shown alongside for contrast.

What does breakeven mean in options? Buyer math vs the seller's moving line

What does breakeven mean in options? Buyers get one formula. Sellers running the wheel track a cost basis line that moves with every premium and every roll.

PremiumGuard Research Deskoptions pricingcost basiswheel strategy
15 min read
Covered call and long call compared side by side, one showing premium collected up front with a capped gain at the strike, the other showing premium paid up front with uncapped upside.

Covered call vs long call: which options trade actually fits your goal

Two opposite bets on the same stock. Compare payoffs, capital, time decay and management to decide whether you are chasing income or chasing upside.

PremiumGuard Research Deskcovered callsoptions pricingincome
22 min read
One put contract shown from both sides at once: the buyer paying eighty dollars for the right to sell one hundred shares at a forty-five dollar strike, and the seller collecting that same eighty dollars against the obligation to buy those shares if asked.

What is a put option? The bet and the paycheck, explained

What a put option is on both sides: the buyer's right to sell, the seller's obligation to buy, payoff and breakeven math, and what assignment means.

PremiumGuard Research Deskoptions pricingassignmentincome
13 min read
Open interest shown as standing contract inventory that updates once a day after the close, set beside volume shown as today's turnover resetting to zero every morning, the two numbers an options chain reports for the same contract line.

Open interest vs volume: the liquidity check before you sell a put

What open interest measures, when it updates, and how to read it next to volume as a liquidity check before you sell a put or a covered call.

PremiumGuard Research Deskoptions pricingwheel strategyincome
16 min read
A $60 stock showing four signals at once: implied volatility at 70%, historical volatility at 35%, an IV rank of 85, and earnings landing three days before expiration, under the line that a screener ranks premium but never ranks the reason behind it.

What high IV options really mean before you sell a single put

What high implied volatility actually signals, how IV rank and IV percentile differ, and how to spot the catalyst before you sell the premium.

PremiumGuard Research Deskoptions pricingassignmentwheel strategy
23 min read
A midpoint premium of $4.60, or $460 for one contract, split into $2.00 of intrinsic and $2.60 of extrinsic value, with stock price, time, volatility and liquidity shown as the four forces that move it.

What is options pricing? The forces behind every premium

Options pricing explained: what a premium is made of, the five inputs that move it, and why a calculator's number can disagree with the market's.

PremiumGuard Research Deskoptions pricingincome