Reference Library

Trading Glossary

Master the language of the markets. Over 50 institutional-grade terms, options Greeks, and strategies defined for 0DTE traders.

The Greeks

Instruments

Market Events

Options Basics

0DTE

An options contract that expires on the same day it is traded.

Assignment

The obligation to fulfill the terms of an option contract (buy or sell shares).

At-the-Money

An option whose strike price is closest to the current underlying price.

Bid-Ask Spread

The difference between the highest bid and lowest ask price for an option.

Breakeven

The price at which an options trade results in zero profit or loss.

Expected Value

The average outcome of a trade multiplied by its probability.

Extrinsic Value

The portion of an option's price beyond its intrinsic value.

Gamma Exposure

A measure of net gamma position across all outstanding options.

Implied Volatility

The market's forecast of a security's likely price movement, embedded in option prices.

In-the-Money

An option with intrinsic value (call: strike < underlying; put: strike > underlying).

Intrinsic Value

The amount an option is in-the-money.

IV Crush

The rapid drop in implied volatility after a catalyst event like earnings.

Leverage

The ability to control a large position with a small amount of capital.

Liquidity

How easily an option can be bought or sold without significantly affecting its price.

Margin

The collateral required to maintain an options position.

Max Pain

The strike price where the most options (by open interest) would expire worthless.

Moneyness

The relationship between an option's strike price and the underlying price.

Open Interest

The total number of outstanding option contracts that have not been settled.

Out-of-the-Money

An option with no intrinsic value (call: strike > underlying; put: strike < underlying).

Pin Risk

The risk that the underlying price pins to a strike price at expiration.

Probability of Profit

The statistical likelihood that a trade will be profitable.

Profit Factor

Gross profits divided by gross losses over a series of trades.

Slippage

The difference between the expected price and the actual execution price.

Time Decay

The erosion of an option's value as time passes, all else equal.

Volatility Skew

The difference in implied volatility across strike prices.

Volume

The number of option contracts traded during a specific period.

Win Rate

The percentage of trades that are profitable.

Strategies

Trading Styles