options

CSP

cash secured put

CC

covered call

PCS

put credit spread, aka bull put spread, aka short put spread

CCS

Call credit spread, aka bear call spread, aka short call spread

PMCC

Poor man’s covered call, aka synthetic covered call

SKIP

Safely keep increasing profits (3 to 9 month Long call)

LEAP

Long term anticipation securities (Greater than 1 year Long call)

BUY/WRITE

B/W (Buy 100 shares and simultaneously sell a CC)

DITM

Deep in the money

ITM

In the money

ATM

At the money

OTM

Out of the money

DOTM

Deep out of the money

BTO

Buy to open

BTC

Buy to close

STO

Sell to open

STC

Sell to close

DTE

Days to expiration

EXP

Expiration date

EXP

Expiration date

EX-DATE

Ex Dividend date

IV

Implied volatility

ROI

Return on investment

CB

Cost basis

DCA

Dollar cost averaging

FOMO

Fear of missing out

GOAT

Greatest of all time

GTC

Good till cancelled

ETF

Exchange traded fund

MA

Moving average

NYSE

New York stock exchange

S & P 500 (SPX)

Stock values of the largest US companies

NASDAQ

National association of securities dealers automatic quotation

Selling - Writing - Short

Seller of the option

Buying - Purchasing - Long

Buyer of the option

Bull market

a period when the overall market is moving upwards

Bear market

A period when share prices are falling, usually by 20% or more from a recent high

Bid

The price a buyer is willing to pay for the option

Ask

The price a seller is willing to accept for the option

Last

The price that was paid or received the last time the option was traded

Call

An option contract that gives the buyer (or holder) the right to purchase and gives the seller (or writer) the obligation to sell, a specified number of shares (typically 100) of the underlying stock at a given strike price on or before the expiration date

Put

An option contract that gives the buyer (or holder) the right to sell, and gives the seller (or writer) the obligation to buy, a specified number of shares (typically 100) of he underlying stock at a given strike price on or before the expiration date of the contract

Arbitrage

The process by which professional traders simultaneously buy and sell similar securities for a profit at theoretically zero risk

Assignment

The receipt of an exercise notice by an option seller (writer) that obligates him to sell(in the case of a call) or purchase (in the case of a put)the underlying security at the specified strike price

Called Away

The process by which a call option writer is obligated to surrender the underlying stock to the option buyer at a price equal to the strike price of the written contract (similar to assignment)

Black-Scholes formula

This version of option pricing model is used most often in the standardized pricing on the floors of the various options and exchanges. It factors in the current stock price, strike price, time until expiration, level of interest rates, any dividends, and the volatility of the underlying security. Two of the creators of this model won the Noble Prize in 1997 for pioneering a new method to value options and other derivatives.

Bollinger Bands

Well known analyst John Bollinger developed Bollinger bands, which a re traditionally plotted above and below the 21 day moving average of a stock price.  These upper and lower boundaries factor in two standard deviations  (about 95 percent) of the price movement over the past 21 days

Fill

The price at which an order is executed

Liquid or liquidity

The ease with which a purchase or sale can be made without disrupting existing market prices. This is typically characterized by high volume and narrower bid/ask spreads

Overbought/oversold

A condition where a stock has reached the top of its cycle (overbought) and is now likely to turn down, or has declined to the point where the selling is exhausted (oversold) and buyers will likely step in to push the share price higher

Margin call

A call from the clearinghouse to a clearing member (variation margin call) or from a broker to a customer (maintenance margin call) to add funds to their margin account to cover an adverse price movement. The added margin assures the brokerage firm and the clearinghouse that the customer can purchase or deliver the entire contract or security if necessary