What is P/E?
8 months ago
Nov 15, 2020
What is P/E?
Price to Earnings is the price of the stock compared to the earnings, a high P/E can mean that the market expects the price to rise.
The rate of change of Delta. Gamma is highest when options are at-the-money and close to expiration.
Selling a put
Selling the right to short a stock. You hope that it will stay flat or increase.
Buying a put
Shorting the stock at a specified price, you are hoping that the price plummets so that you can short it high and buy it back low at the current price.
Time Decay. Works for you when selling options, against when buying.
The market's expectation of the options's contract expiring in-the-money. So if Delta is 60 there is a presumed 60% chance that that contract will expire in the money.
The rate of volatility of the option.
Selling a call
You think that the stock will be flat or decrease in value and are agreeing to sell the stock to someone at a certain price on a certain date. There is unlimited risk with this if there if you have nothing else to cover it.
Buying a call
You this option will go up before expiration and are agreeing to buy it at a price that you hope is lower then the current stock price at expiration.