I suppose everybody has heard the above, somewhat modified, quote in a wide variety of contexts. Well, it's no different in options trading! People are trained to look at data in a wide variety of ways. Some feel comfortable looking at a column of numbers, others like charts, and still others like to look at different types of graphs. Our plan is to look at graphical representations of the 6 building blocks of options trading and then later on we'll learn how to combine these graphs into some common and uncommon options positions. These graphs will allow us to glean a lot of information about our positions, just by looking.

This week I want to talk about the early exercise of options. In order for it to make sense to early exercise an option, there must be some positive cash flow that results from the exercise. We'll look at calls and puts separately to determine when the early exercise is the right way to go.

Examining spread margin and the impact of portfolio margin on your trading account…

Breaking down the margin calculations for short option positions allows you to determine how many options you can sell.

Exploring the difference between equity and index multipliers, settlement values, exercise and more…

Exploring the impact of the short selling ban on put/call parity, bid/ask spreads and options pricing models.