Articles and Updates

OIC celebrates 25 years of educating investors about exchange-listed options. Join us in raising awareness and understanding of options.

CBOE Vest and OIC collaborate to educate investors with Options Strategy Builders. Try collar and covered call strategies with ease.

New study by OIC reveals increased usage of exchange-listed options by financial advisors. Learn about options strategies' growth potential.

Robert Bodnar of Morgan Stanley joins the OIC Roundtable. Enhancing options education for investors and advisors.

Learn about using options to manage risk and achieve investment goals in our "Investing Adventure" campaign. Explore webinars, videos, and more!

Gina McFadden to receive the Joseph W. Sullivan Options Industry Achievement Award for her contributions to the U.S. options industry.

Explore key insights from our March Office Hours sessions, where discussions focused on how options are priced, how Greeks influence positions, and how market structure and volatility shape trading decisions.  .faq-accordion { border-bottom: 1px solid #ddd; } .faq-accordion summary { font-size: 1.1em; font-weight: 600; cursor: pointer; padding: 20px 40px 20px 0; list-style: none; position: relative; color: #333; } .faq-accordion summary::-webkit-details-marker { display: none; } .faq-accordion summary::after { content: '+'; position: absolute; right: 0; top: 50%; transform: translateY(-50%); font-size: 1.5em; font-weight: 300; } .faq-accordion[open] summary::after { content: '−'; } .faq-accordion-content { padding: 0 0 20px 0; } Option Strategies and Position Management Why use a spread instead of a single option? Spreads allow traders to define risk. For example, a bear call spread expresses a bearish view while capping potential losses by purchasing a higher strike call. While this limits maximum profit, it provides protection if the market moves unexpectedly. Do options need to be held until expiration? No. Traders can close positions at any time to realize gains, manage risk, or avoid assignment. In practice, most options positions are closed before expiration rather than exercised. Volatility and the Greeks What does it mean to hedge using Delta? Delta measures how an option's value changes with movements in the underlying asset. Traders can offset directional exposure by taking an opposing position in stock or other options. Because Delta changes as the underlying moves (Gamma), maintaining a neutral position requires ongoing adjustments. Are spreads neutral to volatility? Not necessarily. While spreads are contract neutral, they still carry exposure to implied volatility. Debit spreads tend to benefit from rising volatility, while credit spreads generally benefit when volatility declines. What determines implied volatility? Implied volatility reflects supply and demand in the options market. When demand for options increases, prices rise, and implied volatility increases accordingly. Time Decay and 0DTE Options How does time decay impact options? Time decay (Theta) reduces an option's value as expiration approaches. This effect accelerates in short-dated options, particularly 0DTE contracts, where time value can decline rapidly within a single trading day. Why do Gamma and Theta increase near expiration? As expiration nears, at-the-money options become highly sensitive to price movement. As Gamma increases, Delta shifts more rapidly, while Theta accelerates as remaining time value approaches zero. Market Mechanics and Structure Can options trading impact stock prices? Large option trades can influence the underlying stock. When market makers hedge their exposure—often by buying or selling shares—this activity can contribute to price movement. What is open interest? Open interest represents the number of outstanding option contracts. It increases when new positions are opened and decreases when positions are closed. High open interest at certain strikes can influence trading activity, especially near expiration. What role do market makers play? Market makers provide continuous liquidity by quoting bid and ask prices. Rather than taking directional views, they focus on managing risk and capturing small pricing differences while dynamically hedging their positions. Dividends and Contract Adjustments How do dividends affect options? Regular dividends are typically reflected in option pricing and do not change contract terms. However, special dividends may result in adjustments—such as changes to strike prices or deliverables—to maintain the contract's economic value. Trading in Different Volatility Environments How do traders approach high volatility? When implied volatility is elevated, traders may use defined-risk strategies—such as credit spreads, iron condors, or iron butterflies—to collect premium while limiting potential losses. Strategy selection ultimately depends on market outlook and risk tolerance. Meet OIC Instructors Ken Keating Ken, OIC instructor and pricipal, Investor Education at OCC, began his 25-year trading career at Group One Trading in 1993 on the floor of the PSE (Pacific Coast Stock Exchange) and later transitioned to the floor of the CBOE (Chicago Board Options Exchange). He has held positions as a floor market maker, floor specialist, risk manager, and off floor prop-trader Mark Benzaquen Mark, OIC instructor and principal, Investor Education at OCC, brings 20+ years of experience with options in the financial services industry. Mark began his career in options with Stafford Trading, LLC in 1997 before transitioning to brokerage operations with MF Global in 2000. For more than a decade, Mark was the lead broker for his firm in the NDX/RUT trading pit, gaining special insight into customer order flow and trade execution.