|
This is the list
of option definitions for the time being. When need arises, I will add
more to the list.
- Call:
An option trading vehicle that moves with the stock. Stock moves up,
call moves up. Stock moves down, call moves down.
- Put:
An option trading vehicle that moves against the stock. Stock moves
up, put moves down. Stock moves down, put moves up.
- Buy to
Open (BTO): Any
purchase of one or more option contracts to create or increase a
long position.
- Sell to
Close (STC): Any sale
of one or more option contracts to reduce or close an open long
position.
- Buy to
Close (BTC): Any
purchase of one or more option contracts to reduce or close an open
short position.
- Sell to
Open (STO): Any sale of
one or more option contracts to create or increase a short position.
- Long
Position: Buy first,
sell later to close the position.
- Short
Position: Sell first,
buy later to close the position.
- Buy
long call at 10: The
BUYER has the RIGHT to buy the stock at $10.00 even if the stock
price rises above $10.00.
- Buy
long put at 10: The
BUYER has the RIGHT to sell the stock at $10.00 even if the stock
price drops below $10.00.
- Sell
short put at 10:
The SELLER has the OBLIGATION to
buy the stock at $10.00 even if the stock price drops below $10.00.
- Sell
short call at 10: The
SELLER has the OBLIGATION to sell the stock at $10.00 even if the
stock price rises above $10.00.
- Market
Order: Choosing the
terms of the Market Order indicates that we wish to seek an
immediate execution for this order at the current market price
providing a seller or buyer is available. Buy orders will usually be
executed near or at the ask price. Sell orders will usually be
executed near or at the bid price.
- Limit
Order: Choosing the
terms of Limit Order indicates that we wish to seek the purchase or
sale of an option at a specific price or better. To place a Limit
Order, we MUST specify a price at which we wish the order to be
filled. Limit Order may be set to expire at the end of the trading
day (EOD), end of week (EOW), end of month (EOM), good-til-cancelled
(GTC). There are other choices but the ones listed are the most
popular.
- Bid:
The price at which the buyer is willing to pay for the option.
- Ask:
The price at which the seller is willing to accept for the sale of
the option. It makes sense that the Ask price is always higher than
the Bid price.
- Option
Contract: One option
contract controls 100 stock shares.
- Strike
Price: The set price
that the buyer and seller agree upon for the option.
-
In-The-Money (ITM): The
strike price is lower than the stock price for call option and
higher than the stock price for put option.
-
Out-of-The-Money (OTM):
The strike price is higher than the stock price for call option and
lower than the stock price for put option.
-
At-The-Money (ATM): The
strike price is at or near the stock price for both call and put
option.
-
Support: The level at
which the stock will likely bounce off from it and move up.
-
Resistance: The level
at which the stock will likely bounce off from it and move down.
- Bull
Market: Up market.
Bullish traders make money in an up market.
- Bear
Market: Down market.
Bearish traders make money in a down market.
- Front Month:
The month closest to the current month.
- Back Month:
The month furthest to the current month.
Dennis Phan
潘家墉
02
February 2009
|
