Option Bid
An option bid is the price an option buyer is willing to pay for the option. If the stock option...
Definitions
LEAPS
LEAP stock options have more than six months until expiration. They can have a lifespan of up to three years,...
Back Month Option Term
Back month stock options have more than one month before they expire. They are slightly less liquid than front month...
Front Month Option Term
The nearest term stock option is referred to as the front month. In a four-week expiration cycle, it is the...
Expiration Month/Time
Options have a defined life and option traders select the duration that matches their forecast. Most stock and cash settled...
Exercise Price
An option exercise price is the price level where the option starts to take on intrinsic value. It represents the...
Out of the Money
A call option with a strike price that is much greater than the current stock price is considered to be...
At the Money
When the stock price is the same as the strike price an option is considered at the money. The option...
In the Money
A call option is where the strike price is lower than the current price of the stock is considered to...
Option Strike Price
The strike price (exercise price) is the level at which the buyer of a call option can exercise his right...
Put Options
A put option gives the buyer the right, but not the obligation, to sell the underlying stock or asset at...
Call Option
A call option gives the buyer the right, but not the obligation, to buy the underlying stock or asset at...
Derivative
A derivative in the context of finance is a contract whose value is dependent on another underlying asset. That asset...
Option Trading
Option trading involves investors and speculators buying and selling stock options before they expire. Stock options can be used for...
Index Options
Index options include baskets of stocks that are combined from group or sector indices. The most well known is the...
Option Trading Strategies
Options are one of the most dynamic investment vehicles available to traders and investors. Option strategies allow the trader to...
Stock Option Contract
An option contract gives the buyer of the option the right, but not the obligation to buy (call) or sell...