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A buy order to open is commonly used by traders to open positions on a given option or stock. Buying to open an option position can offset or hedge other risks in the portfolio. The buy-to-open position in options offers the opportunity to make big profits with minimal losses, but has a high risk of expiration. Horizontal Spread
September 25, 2022 A horizontal spread is a simultaneous long and short position in derivatives for the same underlying asset and strike price, but with different expiration dates. Witching Hour
September 25, 2022 The Witching Hour is the last hour of trading before options or other derivatives contracts expire. American Option
September 25, 2022 An American option is a type of option contract that allows holders to exercise their rights at any time up to and including the expiration date. Assignment
September 25, 2022 A cession is a transfer of rights or property from one person to another.# At The Money
September 25, 2022 In the money (ATM) are calls and puts where the exercise price is equal to or very close to the current market price of the underlying security. Barrier Option
September 25, 2022 Barrier options are a type of exotic option in which the payoff depends on whether the option reaches or exceeds a predetermined barrier price. Bear Call Spread
September 25, 2022 Bear call spreads are formed by buying two call options, one long and one short, with different strike prices but the same expiration date. Boundary Conditions
September 25, 2022 Boundary conditions were used to establish the minimum and maximum possible values of call and put options prior to the introduction of binomial tree and Black-Scholes pricing models. Box Spread
September 25, 2022 A box spread is an option arbitrage strategy that combines buying a bullish call spread with a corresponding bearish put spread. Bull Call Spread
September 25, 2022 A bull call spread is an option strategy used when a trader bets that a stock will have a limited increase in value. Bull Spread
September 25, 2022 A bull spread is an optimistic option strategy used when an investor expects a moderate increase in the price of the underlying asset. Call
September 25, 2022 A call can refer to either a call auction or a call option. Credit Spread
September 25, 2022 The credit spread reflects the difference in yield between treasury and corporate bonds with the same maturity. Deep In The Money
September 25, 2022 Deep-in-the-money options have strike prices that are significantly above or below the market price of the underlying asset and thus contain mostly intrinsic value. Delta
September 25, 2022 Delta expresses the amount of change in the price of a derivative instrument depending on the price of the underlying security (for example, shares). Delta Hedging
September 25, 2022 Delta hedging is an options strategy that aims to be directional neutral by establishing compensating long and short positions in the same underlying asset. Early Exercise
September 25, 2022 Early exercise is the process of buying or selling shares in accordance with the terms of an option contract before the option expires. Exercise
September 25, 2022 In option trading, “exercise” means to exercise the right to buy or sell the underlying security specified in the option contract. Exercise Price
September 25, 2022 The exercise price of an option is the price at which the underlying security can be bought or sold. Exotic Option
September 25, 2022 Exotic options are option contracts that differ from traditional options in terms of payment structures, expiration dates, and strike prices. Expiration Time
September 25, 2022 Expiration is the exact date and time when derivatives contracts cease to trade and any obligations or rights come into effect or expire. Extrinsic Value
September 25, 2022 The extrinsic value is the difference between the market price of an option, also known as its premium, and its intrinsic price, which is the difference between the strike price of the option and the price of the underlying asset. Forward Market
September 25, 2022 Forward contracts differ from futures contracts in that they are customizable in terms of size and duration or maturity. Gamma Neutral
September 25, 2022 A gamma-neutral portfolio is an option position whose delta does not change even if the underlying security goes up or down significantly. Gold Option
September 25, 2022 Gold options are option contracts that use either physical gold or gold futures as the underlying instrument.