Options Glossary

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Daily Range

The difference between the high and low price of a security in one trading day.

Day Order

An order to buy or sell a security which expires if not filled by the end of the day.

Day Trade

The purchase and sale of a position in the same day.

Day Trading

An approach to trading in which the same position is entered and exited within one day.

Debit Spread

The difference in value between 2 options, where the value of the long position exceeds the value of the short position.

Deep-in-the-Money

A deep-in-the-money call option has a strike price well below the current price of the underlying instrument. A deep-in-the-money put option has a strike price well above the current price of the underlying instrument. Both primarily consist of intrinsic value.

Delayed Time

Quotes from a data service provider which are delayed up to 20 minutes from real time quotes.

Delta

The amount by which the price of an option changes for every dollar move in the underlying instrument.

Delta-Hedged

An options strategy protecting an option against price changes in the option's underlying instrument by balancing the overall position delta to zero.

Delta Neutral

A position arranged by selecting a calculated ratio of short and long positions that balance out to an overall position delta of zero.

Delta Position

A measure of option or underlying securities delta.

Derivative

Financial instruments based on the market value of an underlying asset.

Discount Brokers

Brokerage firms that offer lower commission rates than full service brokers, but do not offer services such as advice, research and portfolio planning.

Divergence

When 2 or more averages or indices fail to show confirming trends.

Dividend

A sum of money paid out to a shareholder from the stock's profits.

Dow Jones Industrial Average (DJIA)

Used as an overall indicator of market performance, this average is composed of 30 blue chip stocks which are traded daily on the New York Stock Exchange.

Downside

The potential for prices to decrease.

Downside Risk

The potential risk one takes if prices decrease in directional trading.