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Options Glossary

Call Options

A call option is an agreement between a buyer and a seller that gives the right to the options holder to buy a specified number of shares at a predefined price and within a predefined period of time

Intrinsic Value

The intrinsic value of an option is the difference between the strike price of the option and the current price of the underlying. There is only intrinsic value if the option is in the money.

LEAPS

LEAPS are long term options used by buyers and sellers who want longer term protection.

Options Moneyness

Options moneyness refers to the stocks price relative to the options strike price. Options can be In the Money, Out of the Money, or At the Money.

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 options expiration date.

Strike Price

The strike price of an option is the exercise price of an option at expiration.

 

Underlying Security

The underlying security is a specific security that is represented by an options of futures contract. It references the actual stock or commodity.

Warrants

Warrants, like stock options, are derivative financial securities that confer the right to sell or to purchase shares of stock at a certain price for a set duration of time.

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Call Options
Put Option
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