Trading Options Lab

Write (Writer)

admin — Sat, 31 Jul 2010 19:37:21 +0000

An individual who sells an option short.

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Warrant

admin — Sat, 31 Jul 2010 19:21:54 +0000

A security issued by a corporation that gives the holder the right to purchase securities at a specific price within a specified time limit (or sometimes with no time limit). ________ are sometimes like call options, but the main differences are that warrants typically have much longer lives whereas options tend to expire relatively soon, and that _______ are issued by a company to raise money whereas options are created by the OCC.

Volume

admin — Sat, 31 Jul 2010 18:25:23 +0000

The total number of shares of stock or option contracts traded on a given day.

Volatility Skew

admin — Sat, 31 Jul 2010 16:47:32 +0000

This arises when the implied volatilities of options in one month on one stock are not equal across the different strike prices. You should be aware of ___________ because it can dramatically change the risk of your position when the price of the stock begins to move.

Volatility

admin — Sat, 31 Jul 2010 16:41:44 +0000

Generically, _______ is the size of the changes in the price of the underlying security. In practice, _______ is presented as either historical or implied.

Vix (Volatility Index)

admin — Sat, 31 Jul 2010 16:02:03 +0000

Created by the CBOE, the _______ is an index of volatility calculated from the extrinsic value of out of the money SPX index options.

Vertical

admin — Sat, 31 Jul 2010 16:00:49 +0000

An option position composed of either all calls or all puts, with long options and short options at two different strikes. The options are all on the same stock and of the same expiration, with the quantity of long options and the quantity of short options netting to zero.

Vega

admin — Sat, 31 Jul 2010 14:28:37 +0000

An approximation of the change in the price of an option relative to a change in the volatility of the underlying stock when all other factors are held constant. This is typically expressed for a one-percent change in volatility. For example, if a call has a price of $2.00 and a _______ of .65, if volatility rises 1%, the call would have a price of $2.65 ($2.00 + (.65 x 1.00)). Generated by a mathematical model, _______ depends on the stock price, strike price, volatility, interest rates, dividends, and time to expiration.

Uptrend

admin — Sat, 31 Jul 2010 11:29:33 +0000

Successive upward price movements in a security over time.

Up-Tick

admin — Sat, 31 Jul 2010 10:37:12 +0000

A term used to describe a trade made at a price higher than the preceding trade.