Trading Glossary
Master the language of the markets. Over 50 institutional-grade terms, options Greeks, and strategies defined for 0DTE traders.
The Greeks
Instruments
Market Events
Options Basics
0DTE
An options contract that expires on the same day it is traded.
Assignment
The obligation to fulfill the terms of an option contract (buy or sell shares).
At-the-Money
An option whose strike price is closest to the current underlying price.
Bid-Ask Spread
The difference between the highest bid and lowest ask price for an option.
Breakeven
The price at which an options trade results in zero profit or loss.
Expected Value
The average outcome of a trade multiplied by its probability.
Extrinsic Value
The portion of an option's price beyond its intrinsic value.
Gamma Exposure
A measure of net gamma position across all outstanding options.
Implied Volatility
The market's forecast of a security's likely price movement, embedded in option prices.
In-the-Money
An option with intrinsic value (call: strike < underlying; put: strike > underlying).
Intrinsic Value
The amount an option is in-the-money.
IV Crush
The rapid drop in implied volatility after a catalyst event like earnings.
Leverage
The ability to control a large position with a small amount of capital.
Liquidity
How easily an option can be bought or sold without significantly affecting its price.
Margin
The collateral required to maintain an options position.
Max Pain
The strike price where the most options (by open interest) would expire worthless.
Moneyness
The relationship between an option's strike price and the underlying price.
Open Interest
The total number of outstanding option contracts that have not been settled.
Out-of-the-Money
An option with no intrinsic value (call: strike > underlying; put: strike < underlying).
Pin Risk
The risk that the underlying price pins to a strike price at expiration.
Probability of Profit
The statistical likelihood that a trade will be profitable.
Profit Factor
Gross profits divided by gross losses over a series of trades.
Slippage
The difference between the expected price and the actual execution price.
Time Decay
The erosion of an option's value as time passes, all else equal.
Volatility Skew
The difference in implied volatility across strike prices.
Volume
The number of option contracts traded during a specific period.
Win Rate
The percentage of trades that are profitable.
Strategies
Butterfly Spread
A strategy using three strikes to profit from low volatility.
Calendar Spread
An options strategy using the same strike but different expirations.
Cash-Secured Put
Selling a put option while setting aside enough cash to buy the shares if assigned.
Covered Call
Owning the underlying while selling a call option against it.
Credit Spread
An options strategy that involves selling one option and buying another at a different strike, collecting a net credit.
Diagonal Spread
A combination of vertical and calendar spreads with different strikes and expirations.
Iron Butterfly
A neutral strategy selling an ATM straddle and buying OTM wings.
Iron Condor
A neutral options strategy combining a bull put spread and a bear call spread.
Ratio Spread
An options strategy that trades more options on one side than the other.
Straddle
Buying or selling both a call and put at the same strike price.
Strangle
Buying or selling a call and put at different strike prices.
Vertical Spread
An options position using the same expiration but different strikes.
Trading Styles
Day Trading
Buying and selling within the same trading day, closing all positions before market close.
Intraday
Occurring within a single trading day.
Position Sizing
Determining how many contracts to trade based on risk tolerance.
Risk Management
The process of identifying, assessing, and controlling threats to capital.
Scalping
A trading style that profits from small price changes with frequent entries and exits.
Stop Loss
An order to close a position at a predetermined price to limit losses.