Option (finance) — Stock option redirects here. For the employee incentive, see Employee stock option. Financial markets Public market Exchange Securities Bond market Fixed income … Wikipedia
Max Pain — The point at which options expire worthless. The term, max pain, stems from the Maximum Pain theory, which states that most traders who buy and hold options contracts until expiration will lose money. According to the theory, this is due to the… … Investment dictionary
Credit spread (options) — Finance Financial markets Bond market … Wikipedia
Pin risk (options) — Pin risk occurs when the underlier of an option contract settles close to the option s strike value at expiration. In this situation, the underlier is said to have pinned . The risk to the writer (seller) of the option is that they cannot predict … Wikipedia
Knock-Out Option — An option with a built in mechanism to expire worthless, should a specified price level be exceeded. A knock out option sets a cap to the level an option can reach, in favor of the holder. As knock out options limit the profit potential for the… … Investment dictionary
Expiration (options) — For an option contract, expiration is the date on which the contract expires. The option holder must elect to exercise the option or allow it to expire worthless.Typically, option contracts expire according to a pre determined calendar. For… … Wikipedia
Bull spread — In options trading, a bull spread is a bullish, vertical spread options strategy that is designed to profit from a moderate rise in the price of the underlying security.Because of put call parity, a bull spread can be constructed using either put … Wikipedia
Covered Call — An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset in an attempt to generate increased income from the asset. This is often employed when an investor has a short term… … Investment dictionary
Synthetic Put — A trading strategy that combines the short sale of a security with a long call position on the same security. Synthetic put combination is to effectively create a synthetic put position that has almost the same risk reward attributes as a… … Investment dictionary
Option time value — Finance Financial markets Bond market … Wikipedia
Employee stock option — An employee stock option is a call option on the common stock of a company, issued as a form of non cash compensation. Restrictions on the option (such as vesting and limited transferability) attempt to align the holder s interest with those of… … Wikipedia