Options trading account definitions of terms
Second, the last day to trade most index options is the Thursday before the third Friday of the expiration month. It might actually be the second Thursday if the month started on a Friday. Implied volatility for any option can only be determined via an option pricing model. Options investors may lose the entire amount options trading account definitions of terms their investment in a relatively short period of time. Back month For an option spread involving two expiration months, the month that is farther away in time.
For more information, please review the Characteristics and Risks of Standardized Options brochure before you begin trading options. Implied volatility for any option can only be determined via an option pricing model. A position resulting from the opening purchase of a call or put contract and held owned in a brokerage account.
An equity option that gives its buyer the right to sell shares of the underlying stock at the strike price per share at any time before it expires. Stop-Loss Order - An order to sell a stock or option when it reaches a certain price the stop price. Interestingly, options are a lot like most people, in that exercise is a fairly infrequent event. Any cash received in an account from the sale of an option or stock position. It might actually be the second Options trading account definitions of terms if the month started on a Friday.
System response and access times may vary due to market conditions, system performance, and other factors. An opening buy transaction creates or increases a long position; an opening sell transaction creates or increases a short position also known as writing. If an option has no intrinsic value i. This comes in handy when figuring out the potential range of movement for a particular stock.
If the option is out-of-the-money, the extrinsic value is equal to the entire premium. A measurement of the actual observed volatility of a specific stock over options trading account definitions of terms given period of time in the past, such as a month, quarter or year. All investments involve risk, losses may exceed the principal invested, and the past performance of a security, industry, sector, market, or financial product does not guarantee future results or returns. For put options, this means the stock price is above the strike price.
See What is an Index Option? Obviously, only in-the-money options have intrinsic value. By definition, the premium of at- and out-of-the-money options consists only of time value. Any cash received in an account from the sale of an option or stock position.
A spread order is executed as a package, with both parts legs traded simultaneously, at a net debit, net options trading account definitions of terms, or for even money. Any cash received in an account from the sale of an option or stock position. To sell a call or put option contract that has not already been purchased owned. Meet the Greeks What is an Index Option? For put options, this means the stock price is above the strike price.