Learn Secret Day Trading Strategies
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. Your broker is basically an alligator eating up your potential profits.
Alligator spreads will result in the investor losing money or breaking even on the trade even if the market moves considerably in their favor. Be careful of which broker you use and be sure to check their options commission schedule.

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 is the portion of the option premium that is in the money.

A long term equity anticipation security, aka. LEAPS, is a fancy term for a long dated option with expiration of at least 9 months in the future. LEAPS are currently offered on about 450 equities (including equity indexes such as the Dow Jones - DJX and the S&P500 - SPY) and can be traded with calls and puts just as normal equity options.

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

The week beginning on Monday prior to the Saturday of options expiration is referred to as options expiration week.

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

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

A call option is a contractual agreement between the buyer and the seller of the option that gives the right, but not the obligation, for an options holder to buy a specified number of shares of a security at a predefined price(strike price) within a predefined amount of time. Options traders purchase call options with the belief that the security will be above the strike price by the time the option expires. The call option allows buyers to lock in a much lower purchase price if the stock has moved higher.
A call option can be bought, sold, and even shorted. Many traders short calls as a part of a covered call options strategy which allows them to insure the downside risk of a stock that they own. A call option sold without owning the underlying security is known as a "naked" call.