📚Options Dictionary

We will be discussing the following concepts in detail in the next section.

• Moneyness Describes the relationship between an option’s strike price and the underlying asset’s price. • ITM (In the Money): Option has intrinsic value. • ATM (At the Money): Strike ≈ current price. • OTM (Out of the Money): Option has no intrinsic value.

• Delta Exposure The total directional sensitivity of a portfolio to the underlying stock, based on all open option positions.

• Delta Impact The influence that changes in delta exposure have on hedging flows. High delta impact can lead to increased buying or selling pressure in the underlying.

• Open Interest (OI) The number of active (unsettled) contracts for a given option. High OI suggests strong market interest and better liquidity.

• Implied Volatility (IV) The market’s expectation of future price volatility, derived from current option prices. Higher IV often reflects uncertainty or event-driven risk.

• Options Activity Type Classifies how and where options are traded: • Unusual Options Activity (UOA): Abnormally large trades, often considered a signal. • Sweep: A fast execution strategy across multiple exchanges. • Block Trade: A large order executed privately, usually institution-driven.

• Trade Type Specifies trade intent and position status: • Opening: Initiating a new options position. • Closing: Exiting an existing position. • Buy-to-Open, Sell-to-Close, etc., indicate direction.

• Sentiment The perceived market outlook behind a trade: • Bullish: Expecting price to rise. • Bearish: Expecting price to fall. • Neutral: Strategy not based on direction but on volatility or time decay.

• Call Ladder A strategy involving buying one call and selling two others at higher strikes. It reduces upfront cost but limits upside potential.

• Gamma Squeeze A sharp price increase driven by dealers forced to buy stock as call options they’ve sold gain delta, often amplifying bullish momentum.

• Call Wall vs. Put Wall • Call Wall: Strike with the highest call open interest—may act as a resistance zone. • Put Wall: Strike with the highest put open interest—may serve as a support level.