What Is a Common Options Trading Strategy That Utilizes NTM Options?
A common strategy is the Iron Condor, which involves selling an OTM Call and an OTM Put, and buying a further OTM Call and Put for protection. The sold options are often chosen to be NTM (e.g.
0.30 Delta) to maximize the premium collected, while still being OTM. The strategy profits if the underlying price remains between the two short strikes.
Glossar
NTM Options
Classification ⎊ These instruments are options contracts traded on a Not-to-Make basis, meaning they are settled financially rather than physically, often involving crypto assets or indices thereof.
Options Trading
Stewardship ⎊ Involves utilizing these contracts to manage exposure to assets whose underlying technology or governance may evolve, ensuring capital is not locked into potentially obsolete systems.
Underlying Price
Asset ⎊ The underlying price, within cryptocurrency derivatives and options trading, represents the current market value of the reference asset upon which a derivative contract is based.
Maximum Loss Potential
Potential ⎊ Maximum Loss Potential for an option writer is the theoretical worst-case scenario if the underlying crypto asset moves sharply against their position, a risk that is theoretically unbounded for naked call writing.