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.

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Last updated 14 days ago

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.

PreviousData-driven trading strategy NextConcepts

Last updated 14 days ago