A - C
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Assignment - The
receipt of an
Exercise notice by an options writer that requires the writer to
Sell (in the case of a call) or
Purchase (in the case of a put) the
Underlying security at the specified strike price.
At-the-money - An option is at the
Money if the strike price of the option is equal to the
Market price of the
Underlying security. For example, if xyz
Trading at 54, then the xyz 54 option is at the money.
Buy-Write Transaction - The simultaneous purchase of
100 shares of stock and sell of one call option.
Call - This is a
Contract that gives the holder the
Buy a certain quantity (usually 100 shares) of an
Underlying security from the writer of the option, at a specified
price (the strike price)
Up to a specified date (the
Expiration date). An option that gives the holder the right to buy
the underlying futures contract.
Chicago Board Options Exchange (CBOE) - A securities
Exchange created in the early 1970s for
The Public trading of standardized option contracts. Primary
Place stock options, foreign
Currency options, and index options (S&P 100, 500, and OTC 250
Covered call - A short
Call option position in which the writer owns the number of
Shares of the underlying
Stock represented by the option contracts.
Covered calls generally limit the
Risk the writer takes because the stock does not have to be bought
at the Market
price, if the holder of that option decides to
Covered call writing strategy - A
Strategy that involves writing a
On securities that the
Investor owns. See:
Hedge option strategies.
Covered option - Option position that is
Offset by an equal and opposite position in the
Underlying security. Antithesis of naked option.
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