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An options market is the part of the financial market where options contracts are bought and sold, with traders engaging in trading options on various underlying assets, for example stocks, bonds, commodities, currencies and other financial instruments. Standardized options contracts are listed and traded on exchanges such as the Chicago Board Options Exchange (CBOE) in…

An options contract is a financial agreement between two parties that gives the buyer, or holder of the contract, the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within a specified time period. The contract sets out the conditions of the options trade, such as the underlying…

An underlying asset in an options market is the financial instrument that the options contract is based upon. It is the asset that the option gives the holder the right to buy or sell. The value and performance of the underlying asset directly impact the price and potential profitability of the options contract. The underlying…

Options flow is a trading tool used to analyze the buying and selling of options contracts in the market. It provides insights into the volume, direction, and sentiment of options trades being executed by market participants. This analysis involves monitoring the interpreting the flow of orders in the options market, identifying patterns, trends and potential…

In options trading, a leg is the name for the individual component options which together make up your options strategy. The most basic strategy is one that has only one leg. That’s called a single option or a single-leg options. It involves a single option which you buy (long call or long put), or sell…

In options trading, a sweep is typically a large order that is broken into several different smaller orders that can then be filled more speedily on many different exchanges. A sweep order instructs your broker to identify the best prices on the market, regardless of offer size, and fill your order bit-by-bit until the whole…

In options trading, two of the most commonly used metrics when analysing the market are open interest and trading volume. These serve as essential technical indicators to help a trader gauge the sentiment of the market regarding the options or futures contract trade. Here is an explanation of these two metrics: Open Interest: Open interest…

Single leg option is a very basic strategy for options trading in which the trader executes a single option – buy or sell, long or short. Multi-leg options are a trading strategy in which two or more options transactions, or legs, are bought/sold at the same time. Both strategies are useful, depending on your trading…

Multi leg option strategy combines different kinds of options with each other to create a complex strategy in which all the parts are executed at the same time. The four kinds of contract are long call (buy a call option), long put (buy a put option), short call (sell a call option) and short put…