Options Glossary

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Technical Analysis

A method of evaluating securities and commodities by analyzing statistics generated by market activity, such as past prices, volume, momentum and stochastics.

Theoretical value

An option value generated by a mathematical option's pricing model to determine what an option is really worth.

Theta

The Greek measurement of the time decay of an option.

Tick

A minimum upward or downward movement in the price of a security. For example, bonds trade in 32nds, while most stocks trade in eighths.

Time Decay

The amount of time premium movement within a certain time frame on an option due to the passage of time in relation to the expiration of the option itself.

Time Premium

The additional value of an option due to the volatility of the market and the time remaining until expiration.

Time Value (Extrinsic Value)

The amount that the current market price of a right, warrant or option exceeds its intrinsic value.

Trader

A client who buys and sells frequently with the objective of short-term profit.

Trading Account

An account opened with a brokerage firm from which to place trades.

Treasury Bill (T-Bill)

These are short-term government securities with maturities of no more than one year.

Treasury Bond (T-Bond)

A fixed-interest U.S. government debt security with a maturity of 10 years or more..

Treasury Note (T- Note)

A fixed-interest U.S. government debt security with a maturity of between one and ten years.

Triple Witching Day

The third Friday in March, June, September and December when U.S. options, index options and futures contracts all expire simultaneously often resulting in massive trades.

Type

The classification of an option contract as either a put or a call.