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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 Arbitrage in trading?

Arbitrage is the technique of hand in hand buying and selling of assets from various platforms, locations or exchanges with the sole purpose of earning from the price difference which is usually very less in percentage terms. The elementary rule of arbitrage trading is that the quantity of underlying asset purchased and sold should be […]