Options Glossary

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Odds

Odds is the predicted profits divided by the predicted losses obtained by projecting the stock price randomly into the future using the Statistical Volatility (SV). The prediction stops at the expiration of the earlist expiring option leg.

OEX

This term, pronounced as three separate letters, is Wall Street shorthand for Standard & Poor's 100 stock index.

Offer

The lowest price at which a person is willing to sell.

Offer Down

The change of the offer of the market related to a downward price movement at that specific time.

Off-floor Trader

A trader who does not trade on the actual floor of an organized futures of stock exchange.

Offset

To liquidate a futures position by entering an equivalent but opposite transaction. To offset a long position, a sale is made; to offset a short position, a purchase is made.

On-the-Money

The option in question is trading at its exercise price (also referred to as at-the-money).

Opening

The period at the beginning of the trading session at an exchange.

Opening Call

A period at the opening of a futures market in which the price for each contract is established by outcry.

Opening Price

The range of prices at which the first bids and offers were made or first transactions were completed.

Open Order

An order to buy or sell a security at a specified price, valid until executed or canceled.

Open Outcry

A system of trading where an auction of verbal bids and offers is performed on the trading floor. This method is slowly disappearing as exchanges become automated.

Open Trades

A current trades that is still held active in a customer's account.

Opportunity Costs

The theoretical cost of using your capital for one investment versus another.

Option

A security that represents the right, but not the obligation, to buy or sell a specified amount of an underlying security (stock, bond, futures contract, etc.) at a specified price within a specified time.

Option Holder

The buyer of either a call or put option.

Option Premium

This is the price of an option.

Option Writer

The seller of either a call or put option.

Order

A ticket or voucher representing long or short securities and options.

Order Flow

The volume of orders being bought or sold on the exchanges.

Out-of-the-Money

An option whose exercise price has no intrinsic value.

Out-of-the-Money Option (OTM)

A call option is out-of-the-money if its exercise or strike price is above the current market price of the underlying security. A put option is out-of-the-money if its exercise or strike price is below the current market price of the underlying securi ty.

Overvalued

A term used to describe a security or option whose current price is not justified.