Options Glossary
M - O
A-Z
or A-C
| D-L |
M-O |
P-S |
T-Z
Margin
account - An account in which stocks can be purchased for a
Combination of
Cash and a loan. The
Loan in the margin account is collateralized by the stock; if the
value of the
Stock drops sufficiently, the owner will be asked to either put in
more cash, or
Sell a portion of the stock. Margin rules are federally regulated,
but margin requirements
And interest may vary among broker/dealers.
Margin requirement (options) - The amount of
Cash an uncovered (naked) option writer is required to deposit and
maintain to
Cover his daily position
Valuation and reasonably foreseeable
Intraday price changes.
Naked option strategies - An Unhedged
Strategy making
Exclusive use of one of the following: Short
Call strategy (selling or writing call options), and
Short put strategy (selling or writing put options). By themselves,
these positions are called
Naked strategies because they do not involve an offsetting or
risk-reducing position in another option or the
Underlying security. Related:
Covered option strategies. Antithesis of covered option.
Obligation - A
LEGAL responsibility, such as to repay a debt. Attributes
forced upon the seller of an option. Option
(Options contract) - A contract that gives its owner the right but not
the obligation, to earthier buy or sell specified underlying assets at
specified price for a specified period of time.
Option spread - The
Trading of options of the same
Class at the same time in
Order to
Profit from changes in the
Size of the spread between different options.
Out-of-the-Money - A
Call option whose strike price is higher than the
Market price of the
Underlying security, or a put option whose strike price is lower
than the Market
price of the underlying security.
Option premium - The option price.
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