Stock Option Terms: Fibonacci Retracement

Fibonacci Retracement:
Fibonacci retracements are based on ratios that are often found in nature, physics, and mathematics. For option traders, Fibonacci retracement levels are where prices on a chart move off their latest tops or bottoms by swings of 38.2%, 50%, or 61.8% before resuming their original trend direction. Option traders can capitalize on these Fibonacci retracements by placing call or put options at or around these levels, depending on the direction traders expect the market to move.