Options Trading Glossary - Definitions, Abbreviations, Terminology and Meaning

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Options Trading Definitions, Abbreviations, Meanings

S No	Term	Definition
58	Mark-to-Market Settlement (MTM)	Marked-to-market, or mark-to-market (MTM) settlement, refers to the process by which the profit or loss made on an open position of a derivatives contract is adjusted on the same day from the trader's account.
57	Index Options	Index Option is an Option contract where the underlying is an index like NIfty 50 or Bank Nifty.
56	Option Tick Size	The minimum value by which the price of an Option contract can change.
55	Algo Trading	Algo trading involves leveraging software programs for automatic trading.
54	Options Hedging	Option contracts are useful tool for hedging.
53	vertical spread option strategy	Its a 2 legged strategy involving buying/selling of Call and Put Options.
52	Uncovered call writing	Selling a Call Option without holding its underlying.
51	Options Writer	The seller of an Option is called Option Writer.
50	Options Chart	Option chains are used to perform technical analysis of the underlying stock of an Option by traders.
49	Options Trading App	A mobile app for traders to make Options trades from anywhere, anytime.
48	Options Market	A place where Options are bought and sold by traders.
47	Options Contract	A contract that gives you as a buyer the right, but not the obligation, to sell an underlying asset at a specified price and on a specific date.
46	Cloud Order	A special feature offered by ICICI securities for traders to create and save orders anytime and execute it during market hours.
45	Options Secondary Market	A market where previously issued options in the NSE and BSE are traded.
44	Option Market Participants	On the basis of their risk appetite and trading apprroach, participants in Options market can be categorized into- Hedgers, Speculators and arbitrageurs.
43	Options Fair Market Value	It is the theoretical price of an option calculated with the help of Options pricing models.
42	Post-market Trading Hours (Post Close Trading Session)	A session conducted between 3:40 to 4: 00 PM for trading shares at a fixed predetermined price.
41	Pre-Market Trading hours	The session is conducted between 9 to 9:15 AM and has 2 sessions of Order Entry and Order Matching period.
40	Volume in Options	It is an indicator of the traders interest in a particular Option.
39	Open Interest (OI)	Open interest (OI) is a derivative indicator that refers to the total number of outstanding derivative contracts, such as options or futures, that are unsettled at a given point in the market.
38	Options Spread	A spread is created by taking 2 positions of BUY and SELL of an Option of same underlying and expiration date.
37	Moving averages	It is used to predict the direction of a particular trend of an Option.
36	Rho Option Greek	Rho measures the change in the price of an Option with every percentage change in the interest rates.
35	Vega Option Greek	Vega measures the impact of the change in the volatility of the underlying on the price of its Option.
34	Theta Option Greek	Theta measures the change in the price of an Option with each passing day towards expiry.
33	Gamma Option Greek	Gamma measures the change in the Delta of an Option to change in its underlying.
32	Delta Option Greek	Delta measures by how much the price of an Option change with change in the price of its underlying.
31	Option Greeks	Options Greeks help a trader to ascertain change in the price of an Option due to change in various factors.
30	Option Writer or Option writing	An Option Writer is one who sells or shorts an Option with holding the underlying of the Option.
29	Over The Counter (OTC) Options	Options traded away from exchanges like NSE and BSE are called OTC Options.
28	European Option	European Options can only be exercised on expiry date.
27	American Option	American Options can be exercised on any day within the expiration date.
26	Short Option	A short Option is a position wherein a trader sells an Option.
25	Long Option	A Long option is a position wherein a trader buys an Option.
24	Exercising Options	When a trader decides to exercise the right of an Option contract, it is called exercising the Option.
23	Paired Option Contracts	A contract where a trader can take take 2 different position on the same Option in a single order.
22	Assignment in Options	The Process to choose a buyer or a seller to honor the right of an Option contract is called Assignment.
21	Options Arbitrage	A strategy where a trader takes multiple positions to minimize risk of his trade.
20	Box Spread Strategy	An Option arbitrage strategy used when the underlying is under priced.
19	Squaring Off an Option	It is selling an Option of the same underlying, expiration date and strike price which you have bought.
18	Bear Call Spread	A trade where you take a BUY and SELL position of an Option of same underlying and expiry but different strike prices.
17	Bull Call Spread	A trade position where you take a BUY and SELL position of an Option of same underlying and expiry but of different strike prices.
16	Box Spread	An arbitrage strategy involving Call & Put Option created to get risk less profit.
15	Expiry	The last date, usually the last Thursday of the month, on which an Option contract expires.
14	Spot Price	The current market price of the underlying of an Option is called Spot Price.
13	Lot Size	The number of shares of the underlying in an Option contract is called Lot size.
12	Volatility	The rate of change in the Price of the underlying of an Option is called Volatility.
11	Time decay or erosion	The decrease in the value of an Option with passage of time is called Time decay.
10	Synthetic position	It is created using different types of Option to create one single Option.
9	Strike price or exercise price	The specific price for which an Option is purchased. The buyer gets the right to exercise his Option at this Price.
8	Put Option	An Option contract where the buyer gets the right but not the obligation to sell an underlying at a specified price and within a specified period.
7	Options Premium	The price an Option buyer pays or an Option seller receives is called the premium of an Option.
6	Out-of-the-money (OTM)	When the price of an Option has not reached its strike price, it is called in the OTM.
5	Long position	When you buy an Option, it is called a Long position.
4	In-the-money (ITM)	When the price of an Option has gone beyond its strike price, it is called in the ITM.
3	Call Option	An Option contract where the buyer gets the right but not the obligation to buy an underlying at a specified price and within a specified period.
2	Break-Even Point (BEP)	A price wherein an Option contract is nether a profit nor a loss.
1	At-the-money (ATM)	When the price of an Option is equal its strike price, it is called in the ATM.

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