Options Glossary

Alligator Spread

An Alligator Spread refers to the initiation of a unique mix of call options and put options, which in aggregate generates such a high commission for the broker that it strips most of the profit potential of the trade by way of commissions

Underlying Security

Definition of Underlying Security

The underlying security, or underlier, is a specific security, commodity, or other financial instrument that is represented by an options or derivative contract.

Intrinsic Value

What is Intrinsic Value?

Intrinsic value is the portion of the option premium that is in the money. If the stock price is above the strike price of the call option, the intrinsic value of the option can be calculated by taking the difference between the current stock price and the strike price of the option.

LEAPS

What are LEAPS?

Strike Price

What is a Strike Price?

The strike price of an option is simply a contractual price per share at which an option holder can exercise their right to buy or sell the underlying security that the option contract is based upon.  For this reason, strike price is also referred to as the "exe

Options Expiration Week

What is Options Expiration Week?

The week beginning on Monday prior to the Saturday of options expiration is referred to as options expiration week. This week can be slightly more volatile as options holders begin to exercise their options contracts and roll forward their options to ones with later expiration dates.

Options Moneyness

What is a Option Moneyness?

You will hear the following terms when dealing with options: in the money, at the money, and out of the money.

Put Option

What is a Put Option?

A put option is a contractual agreement between the buyer and the seller of the option that gives the right, but not the obligation, for the put holder to force the seller of the put to purchase the underlying security at the strike price on the

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    • Call Options

    What Are Call Options?

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