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What is the meaning of ‘Butterfly Spread Option’?

A Butterfly Spread Option is a neutral strategy with limited risk. Also known as a Butterfly Option Spread it involves a combination of bull and bear spreads. Four option contracts with same expiry date at three strike points are combined by the holder. It creates a perfect price range and profit for the holder. A […]

What is Black-Scholes Model?

Black-Scholes model is used to find the theoretical value of a call or put option on the basis of the following, namely volatility, option type, underlying stock price, risk-free rate, strike price, time etc.  All possibilities of arbitrage are completely wiped out as there is less speculation and proper pricing of options as compared to […]

What is the meaning of Bull Spread?

Bull Spread refers to a strategy in options trading where profits are maximised if the price of the underlying security goes up. The Spread is created by both puts and calls at various strike prices. The option is purchased at a lower strike price and is sold at a higher strike price. Usually, the call […]