Θ // Options glossary

Options terminology, A to Z.

A plain-language glossary of the options and trading terms used across the Optionality desks. Each definition is self-contained — theta, delta, IV crush, 0DTE and the rest — written so a beginner can read one entry and understand the alert it appears in.

LAST UPDATED JULY 2026

AAssignment

Assignment is when the seller of an option is required to fulfil the contract — delivering or buying the underlying shares at the strike. It happens most often near expiry when an option is in the money, and it is the main reason short option positions are managed before expiration rather than left to run.

AAt the money

An option is at the money when the strike price sits at or very near the current price of the underlying. At-the-money contracts carry the most extrinsic value and the highest gamma, which makes them the most sensitive to both movement and the passage of time.

BBid-ask spread

The bid-ask spread is the gap between the highest price a buyer will pay and the lowest a seller will accept. Wide spreads make a position expensive to enter and exit, which is why liquidity matters as much as the setup itself when choosing a contract.

BBreak-even

Break-even is the price the underlying must reach for a trade to make neither profit nor loss at expiry. For a long call it is the strike plus the premium paid. Alerts state entry and targets rather than break-even because most positions are closed well before expiration.

CCall option

A call option gives the buyer the right, not the obligation, to buy the underlying at the strike price before expiry. Traders buy calls when they expect the price to rise; the maximum loss is the premium paid, and the potential gain is uncapped.

CCovered call

A covered call is selling a call option against shares you already own. It collects premium in exchange for capping upside above the strike. It is a common income strategy in flat or mildly rising markets and is one of the structures the options desk explains.

CCredit spread

A credit spread is selling one option and buying another further out of the money, collecting the difference as premium. Risk is defined by the distance between the strikes, which is why the options desk favours spreads when volatility is high.

DDay trading

Day trading is opening and closing positions within a single session so no risk is carried overnight. Optionality's day desk posts levels before the bell, calls entries as they trigger, and is flat by the close every session.

DDelta

Delta measures how much an option's price moves for a one-dollar move in the underlying. A 0.50 delta call gains roughly fifty cents per dollar. Delta also approximates the probability that a contract finishes in the money.

EExpiry

Expiry is the date an option contract ceases to exist. After it, the contract is either exercised or worthless. Time decay accelerates sharply into expiry, which is why short-dated trades are managed actively rather than held to the final bell.

GGamma

Gamma measures how quickly delta changes as the underlying moves. High gamma means a position's directional exposure shifts fast — profitable when right, punishing when wrong. It peaks for at-the-money contracts close to expiry.

IImplied volatility

Implied volatility is the market's expectation of future movement, priced into an option. High implied volatility makes contracts expensive; low makes them cheap. It usually rises into scheduled events such as earnings and falls immediately after.

IIn the money

A call is in the money when the underlying trades above the strike; a put when it trades below. In-the-money contracts carry intrinsic value and lose value to time decay more slowly than out-of-the-money ones.

IIntrinsic value

Intrinsic value is the portion of an option's price that would remain if it expired right now. Everything above that is extrinsic value — time and volatility premium — and it decays to zero by expiry regardless of what the underlying does.

IIron condor

An iron condor sells a call spread and a put spread on the same underlying, profiting if price stays inside a range. Risk is defined on both sides. It is a premium-selling structure used when implied volatility is elevated and direction is unclear.

IIV crush

IV crush is the sharp drop in implied volatility immediately after a scheduled event such as earnings. Options can lose value even when the underlying moves in your favour, which is why the desk states plainly when a trade carries event risk.

LLiquidity

Liquidity is how easily a contract can be traded without moving its price. It shows up as tight spreads, high volume and meaningful open interest. Illiquid contracts are avoided regardless of how good the chart looks.

OOpen interest

Open interest is the number of contracts currently outstanding on a strike. It indicates where positioning is concentrated. Rising open interest alongside rising volume suggests new money entering rather than positions being closed.

OOpening range

The opening range is the high and low established in the first minutes after the market opens. The day desk uses it as the session's first structure — a break or a fade of that range is the day's earliest defined setup.

OOut of the money

A call is out of the money when the underlying trades below the strike; a put when above. These contracts have no intrinsic value, are cheaper, and lose value fastest to time decay if the underlying does not move.

PPremium

Premium is the price paid to buy an option or collected to sell one. It combines intrinsic value with extrinsic value from time and implied volatility. For a buyer, the premium is the maximum possible loss on the position.

PPut option

A put option gives the buyer the right to sell the underlying at the strike price before expiry. Traders buy puts to profit from a decline or to hedge existing shares. The maximum loss for a buyer is the premium paid.

RRho

Rho measures an option's sensitivity to interest rate changes. It has the smallest effect of the Greeks on short-dated contracts, but matters for long-dated positions where the cost of carry is a real component of the price.

SStop loss

A stop loss is the price at which a losing position is closed, defined before entry. Every Optionality alert states its stop when the call is posted — not after the trade turns red. It is the single field most alert services omit.

SStrike price

The strike price is the level at which an option can be exercised. It sets how much intrinsic value a contract has and how sensitive it is to movement. Every alert names the exact strike so there is never any ambiguity about the contract.

SSwing trading

Swing trading holds positions for days to weeks to capture a larger move. Optionality's swing desk posts setups before they trigger, with wider stops and enough lead time for members who cannot trade during market hours.

TTheta

Theta measures how much value an option loses per day purely from the passage of time. It works against buyers and for sellers, and accelerates as expiry approaches. Theta is the Greek the Optionality brand is named for.

TTrim

A trim is selling part of a position while keeping the rest open, usually at the first target. It converts a paper gain into a real one and lets the remainder run. Trims are posted in the same thread as the original alert.

VVega

Vega measures how much an option's price changes for a one-point move in implied volatility. Long options are long vega, so they gain when volatility rises and lose when it collapses after an event.

00DTE

A 0DTE option expires the same day it is traded. These contracts move violently because gamma and theta are both at their most extreme. The options desk trades them with smaller stated size and a defined stop, never as a lottery ticket.

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