Options Glossary

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Illiquid Market

Market which has no volume that subsequently creates a lot of slippage due to lack of trading volume.

Immediate/Cancel

An order which must be filled immediately or canceled.

Index

An index is a group of stocks which can be traded as one portfolio, such as the S&P 500. Broad-based indexes cover a wide range of industries and companies and narrow-based indexes cover stocks in one industry or economic sector.

Index Options

Call options and put options on indexes of stocks are designed to reflect and fluctuate with market conditions. Index options allow investors to trade in a specific industry group or market without having to buy all the stocks individually.

Interest Rate

The charge for the privilege of borrowing money, usually expressed as an annual percentage rate.

Interest Rate Driven

Refers to a point in the business cycle when interest rates are declining and bond prices are rising.

Inter-market Analysis

Observing the price movement of one market for the purpose of evaluating a different market.

Inter-market Spread

A spread consisting of opposing positions in instruments with two different markets.

In-the-Money

If you were to exercise an option and it would general a profit at the time, it is known to be in the money.

In-the-Money Option

A "call" option is in-the-money if the strike price is less than the market price of the underlying security. A "put" option is in-the-money if the strike price is greater than the market price of the underlying security Intrinsic Value The amount by which a market is in-the-money. Out-of-the-money options have no intrinsic value. Calls = underlying -strike price. Puts = strike price - underlying.

Inverse Relationship

Two or more markets which act totally opposite of one another producing negative correlations.

Investment

Any purchase of an asset to increase future income.

Iron Butterfly

The combination of a long (short) straddle and a short (long) strangle. All options must have the same underlying and have the same expiration.