Choosing Strike Prices: Probability, Premium and Trade-Offs
Not all strikes are equal. This segment uses a live strike price table to show how delta, premium and probability of profit shift as you move further out-of-the-money in a bear call spread.
0:00 Options as a Risk-Reward Trade-Off
1:42 Delta, Probability and Break-Even
2:44 Selecting Your Short Strike
5:02 Strikes, Premium and Protection
6:20 Expiration Dates and Time Decay
Register to view the complete Understanding Credit Spreads: Mechanics and Applications webinar: https://bit.ly/4vqr8dU.
Recommended Videos
Introducing the Greeks: Your Options Dashboard
Learn how Delta, Gamma, Theta and Vega each map to a component of a car's dashboard — speed, acceleration, fuel and weather — and why tracking all four is essential to understanding what drives an option's price.
Watch Now
The Effects of the Greeks
Explore how changes in Theta and Vega affect this options strategy.
Watch Now
Strike Selection for Protective Puts
Strike price is important as it impacts the level of protection that an investor gains from the strategy.
Watch Now
Long Call - Strike Selection, Moneyness & Time Decay
Review essential concepts that go into the value of an option contract.
Watch Now
Reverse Stock Splits and Strike Prices
Learn why your strike price doesn't change in reverse splits, how deliverables are reduced and the special risks of subsequent adjustments.
Watch Now
Strike Selection: The Premium vs. Probability Tradeoff
Compare deep out-of-the-money, out-of-the-money, at-the-money, and in-the-money strikes from a seller's perspective. OIC instructor Mark Benzaquen explains the tradeoff between premium collected and probability of assignment.
Watch Now