Options Glossary
D - L
A-Z
or A-C
| D-L |
M-O |
P-S |
T-Z
Exercise
- The Right
granted under the terms of a listed options contract.
Call holders
Exercise their right to
Buy the
Underlying security. Put holders exercise their right to
Sell the underlying security. There is generally an
Exercise limit placed by the options exchange. This is to prevent a
group of investors or an individual
Investor from
Cornering the market on an underlying security. o implement the
right of the holder of an option to buy (in the case of a call) or sell
(in the case of a put) the underlying security.
Exercise notice - A broker's notification a client
want to
Exercise a
Right to
Buy or Sell
(depending
On the Type
of contract) the
Underlying security of the option contract.
Expiration - The date, after which, the option is no
longer a valid contract. Expiration date - The
last day (in the case of American-style) or the only day (in the case of
European-style)
On which an option may be exercised. For
Stock options, this date is the Saturday immediately following the
third Friday of the
Expiration month; brokerage firms may set an earlier deadline for
notification of an option holder's intention to exercise. If Friday is a
holiday, the
Last trading day will be the preceding Thursday.
In-the-money option - An option that has value. A call
option with a strike price lower then the price of the underlying
security, or a put option with a strike price higher then the price of
the underlying security. Leaps - Term Equity
Anticipation Securities. Currently, these are long
Term put and call options with January expirations
Up to 2-1/2 years. Long position - Owning or
holding options (i.e., the number of contracts bought exceeds the number
of contracts sold). For equities, a
Long position occurs when an individual owns securities. An owner of
1,000 Shares
of Stock
is said to be "Long the stock."
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