Options Trading

Asian Option

An exotic option whose payoff depends on the average price of the underlying asset during some portion of the life of the option. See also: American Option

Leaps

Long-dated, exchange-traded options. Stands for “Long-term Equity Anticipation Securities.”

Chicago Board Options Exchange

Established in 1973, the Chicago Board Options Exchange created and listed the first exchange-listed standardized stock options. The CBOE has become one of the world’s largest options exchanges with an annual trade of over 450 million options contracts. See also: Financial Exchanges

Amex Index Options

The American Stock Exchange was one of the pioneers in index options and today trades put and call options on broad market, industry sector and international indices. Index options make it possible for investors to leverage an entire market to speculate or hedge against pr

American Option

An option that can be exercised at any time prior to or on the expiration date. See also: European Option

Managing SPAN margin to maximize returns

The SPAN margin system used in futures can not only provide high returns on invested capital, it encourages responsible risk management By James Cordier, Michael Gross, Portfolio Managers, Liberty Trading Group/OptionSellers.com When I was a young man in college, three of my friends and I de

Alligator Spread

Describes an options market spread, the commission for which is so large that the client is unlikely to make a profit even if the markets move in the client’s favor.

Aggregate Exercise Price

The exercise (strike) price of a a put or call option multiplied by the number of underlying securities involved in the contract (contract size). When calculating the aggregate exercise price, the premium paid or received on the option is not considered. Aggregate exercise prices are used to calcula

Intrinsic Value

A measure of the value of an option or a warrant if immediately exercised, that is the extent to which it is in-the-money. The amount by which the current price for the underlying commodity or futures contract is above the strike price of a call option or below the strike

Diagonal Spread

A spread between two call options or two put options with different strike prices and different expiration dates. See also: Horizontal Spread, Vertical Spread