Welcome To Options Trading For Newbies

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Options Trading For Newbies

BELL CURVE

BEAR PUT SPREAD - A net debit transaction established by selling a put and buying another put at a higher strike price, on the same underlying, in the same expiration. It is a directional trade where the maximum loss = the debit paid, and the maximum profit = the diﬀerence between the strike prices less the debit. No margin is required.
BELL CURVE - See NORMAL DISTRIBUTION.
BETA - A prediction of what percentage a position will move in relation to an index. If a position has a BETA of 1, then the position will tend to move inline with the index. If the beta is 0.5 this suggests that a 1% move in the index will cause the position price to move by 0.5%. Beta should not be confused with volatility.
Note: Beta can be misleading. It is based on past performance, which is not necessarily a guide to the future.
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BID - This is the price that the trader making the price is willing to buy an option or security for.
BID-ASK SPREAD - The diﬀerence between the Bid and Ask prices of a security. The wider (i.e. larger) the spread is, the less liquid the market and the greater the slippage.

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