Extrinsic Value

• 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.

• The Witching Hour is the last hour of trading before options or other derivatives contracts expire.

• 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.

A cession is a transfer of rights or property from one person to another.#

• 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 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 spreads are formed by buying two call options, one long and one short, with different strike prices but the same expiration date.

• 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.

• A box spread is an option arbitrage strategy that combines buying a bullish call spread with a corresponding bearish put spread.

• A bull call spread is an option strategy used when a trader bets that a stock will have a limited increase in value.

• A bull spread is an optimistic option strategy used when an investor expects a moderate increase in the price of the underlying asset.

• A buy order to open is commonly used by traders to open positions on a given option or stock.

• A call can refer to either a call auction or a call option.

• The credit spread reflects the difference in yield between treasury and corporate bonds with the same maturity.

• 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 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 is an options strategy that aims to be directional neutral by establishing compensating long and short positions in the same underlying asset.

• Early exercise is the process of buying or selling shares in accordance with the terms of an option contract before the option expires.

• In option trading, “exercise” means to exercise the right to buy or sell the underlying security specified in the option contract.

• The exercise price of an option is the price at which the underlying security can be bought or sold.

• Exotic options are option contracts that differ from traditional options in terms of payment structures, expiration dates, and strike prices.

• Expiration is the exact date and time when derivatives contracts cease to trade and any obligations or rights come into effect or expire.

• Forward contracts differ from futures contracts in that they are customizable in terms of size and duration or maturity.

• A gamma-neutral portfolio is an option position whose delta does not change even if the underlying security goes up or down significantly.

• Gold options are option contracts that use either physical gold or gold futures as the underlying instrument.