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If the U.S. dollar is the base currency (the first of the pair), such as with the USD/EUR pair, the pip value involves the exchange rate. Pip Value=(size of a Pip)/(Exchange Rate)*(Lot Size) [6] For example, .0001 divided by a USD/CAD exchange rate of 1.3600 and then multiplied by a standard lot size of 100,000 results in a pip value of $7.35.
The simplest type of bid-ask spread is the quoted spread. This spread is taken directly from quotes, that is, posted prices. Using quotes, this spread is the difference between the lowest asking price (the lowest price at which someone will sell) and the highest bid price (the highest price at which someone will buy).
A spread position is entered by buying and selling options of the same class on the same underlying security but with different strike prices or expiration dates. An option spread shouldn't be confused with a spread option. The three main classes of spreads are the horizontal spread, the vertical spread and the diagonal spread. They are grouped ...
Profit diagram of a box spread. It is a combination of positions with a riskless payoff. In options trading, a box spread is a combination of positions that has a certain (i.e., riskless) payoff, considered to be simply "delta neutral interest rate position".
A condor is a limited-risk, non-directional options trading strategy consisting of four options at four different strike prices. [ 1 ] [ 2 ] The buyer of a condor earns a profit if the underlying is between or near the inner two strikes at expiry, but has a limited loss if the underlying is near or outside the outer two strikes at expiry. [ 2 ]
A simple two-card spread, the Yin-Yang duality spread brings attention to the symmetry between the internal and external realms. Think of this as two sides of a situation.
A long butterfly options strategy consists of the following options: Long 1 call with a strike price of (X − a) Short 2 calls with a strike price of X; Long 1 call with a strike price of (X + a) where X = the spot price (i.e. current market price of underlying) and a > 0. Using put–call parity a long butterfly can also be created as follows:
In finance, a credit spread, or net credit spread is an options strategy that involves a purchase of one option and a sale of another option in the same class and expiration but different strike prices. It is designed to make a profit when the spreads between the two options narrows.