• Stock option trading


    American-Style Option - An option contract that may be exercised at any time between the date of purchase and the expiration date. Most exchange-traded options are American-style. Read The Tutorial On American Style Options.

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    Uncovered Option - A written option is considered to be uncovered if the investor does not have a corresponding position in the underlying security.

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    Bear Spread - an option strategy that makes its maximum profit when the underlying stock declines and has its maximum risk if the stock rises in price. The strategy can be implemented with either puts or calls. In either case, an option with a higher striking price is purchased and one with a lower striking price is sold, both options generally having the same expiration date. See also Bull Spread. Option Strategy Library.

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    Spread Strategy - Any option position having both long options and short options of the same type on the same underlying security.

    Protected Strategy - A position that has limited risk. A protected short sale (short stock, long call) has limited risk, as does a protected straddle write (short straddle, long out-of-the-money combination). The Ride The Flow System is an example of a protected strategy.

    Margin (stocks) - To buy a security by borrowing funds from a brokerage house. The margin requirement-the maximum percentage of the investment that can be loaned by the brokerage firm-is set by the Federal Reserve Board.

    Last Trading Day - The third Friday of the expiration month. Options cease trading at 8:55 PM Eastern Time on the last trading day.

    Moneyness - The strike price of an option in relation to the prevailing price of the underlying asset. Read More About Moneyness Here!

    Calendar Spread - A type of options trading strategy that uses a combination of options with different expiration dates in order to profit primarily from time decay. Read all about Calendar Spreads.

    Volatile - A stock or market that is expected to move up or down unexpectedly or drastically is known as a volatile market or stock.


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