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Common options terms explained. Here are some of the most common options terms and definitions. American-style option. American-style options can be exercised at any time prior to the expiration date.
The terms of an OTC option are unrestricted and may be individually tailored to meet any business need. In general, the option writer is a well-capitalized institution (to prevent credit risk). Option types commonly traded over the counter include: Interest rate options; Currency cross rate options, and; Options on swaps or swaptions.
Following is a glossary of stock market terms. All or none or AON: in investment banking or securities transactions, "an order to buy or sell a stock that must be executed in its entirely, or not executed at all". [1] Ask price or Ask: the lowest price a seller of a stock is willing to accept for a share of that given stock. [2]
The most bearish of options trading strategies is the simple put buying or selling strategy utilized by most options traders. The market can make steep downward moves. Moderately bearish options traders usually set a target price for the expected decline and utilize bear spreads to reduce cost.
Options trading can be complex, and the trading jargon may confuse even experienced investors and traders. Two of the most common options contracts to understand are call and put options.
Exchanges quote options prices in terms of the per-share price, not the total price you must pay to own the contract. For example, an option may be quoted at $0.75 on the exchange.
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