Glossary
Essential terms for options trading and using the FITools platform.
Options Trading Terms
Section titled “Options Trading Terms”Basic Terms
Section titled “Basic Terms”American Option: An option that can be exercised at any time before expiration.
Assignment: When an option seller is required to fulfill the obligation of the contract.
At-the-Money (ATM): When the strike price equals the current stock price.
Call Option: A contract giving the right to buy stock at a specific price.
Exercise: Using the right to buy or sell provided by an option contract.
Expiration Date: The date when an option contract expires.
In-the-Money (ITM): When an option has intrinsic value.
Intrinsic Value: The immediate exercise value of an option.
Out-of-the-Money (OTM): When an option has no intrinsic value.
Premium: The price paid to purchase an option.
Put Option: A contract giving the right to sell stock at a specific price.
Strike Price: The price at which an option can be exercised.
Advanced Terms
Section titled “Advanced Terms”Delta: Measures how much an option’s price changes relative to the underlying stock.
Gamma: Measures the rate of change of delta.
Implied Volatility: The market’s forecast of the underlying stock’s volatility.
The Greeks: Risk measures including Delta, Gamma, Theta, and Vega.
Theta: Measures time decay of an option’s value.
Vega: Measures sensitivity to changes in implied volatility.
Strategy Terms
Section titled “Strategy Terms”Covered Call: Selling a call option while owning the underlying stock.
Cash-Secured Put: Selling a put option while having cash to buy the stock.
Iron Condor: A strategy combining put and call spreads.
Protective Put: Buying a put option to protect a long stock position.
Spread: A strategy involving multiple options on the same underlying.
FITools Platform Terms
Section titled “FITools Platform Terms”Dashboard: The main interface showing portfolio and market data.
Position: An open trade or holding in your account.
Risk Analysis: Tools for measuring and managing trading risk.
Strategy Builder: FITools’ tool for creating and analyzing options strategies.
Watchlist: A list of stocks you’re monitoring for trading opportunities.
Risk Management Terms
Section titled “Risk Management Terms”Buying Power: The amount of money available for trading.
Margin: Borrowed money used to purchase securities.
Maximum Loss: The worst-case scenario for a trade.
Maximum Profit: The best-case scenario for a trade.
Position Size: The amount of capital allocated to a specific trade.
Risk/Reward Ratio: The relationship between potential profit and potential loss.
Market Terms
Section titled “Market Terms”Bid: The highest price a buyer is willing to pay.
Ask: The lowest price a seller is willing to accept.
Bid-Ask Spread: The difference between bid and ask prices.
Liquidity: How easily an asset can be bought or sold.
Market Hours: When the stock market is open for trading.
Volume: The number of shares or contracts traded.
Need More Information?
Section titled “Need More Information?”For detailed explanations of these terms, see our educational content or contact support.