Glossary of Option Terms 

Real-time:
Data received from a quote service at the time the prices change.
Realized Profit:
Profits that materialized from the closing out of a trading/investment position.
Relative Strength:
A stock's price movement over the past year as compared to a market index.
Relative Strength Index (RSI):
An indicator used to identify price tops and bottoms.
Resistance:
A price level the market has a hard time breaking through to the upside.
Return:
The income profit made on an investment.
Reward-Risk Ratio:
The relationship between the maximum potential risk and maximum potential reward of a trade.
Risk:
The potential financial loss inherent in a investment.
Seasonal Market:
Refers to a market with a repeated pattern from year to year. Some commodity markets fall into this category.
Securities and Commodities Exchanges:
These are establishments where option, futures and equities are traded.
Securities and Exchange Commission (SEC):
Created by the American Congress, the Commision is set-up to regulate the financial market (securities) and also to protect investors.
Security:
A traded financial instrument, eg bonds and equities.
Shares (Equities):
Ownership of equities in company, usually referred to as publicly traded shares but can be also private equities.
Short Straddle:
Selling equal number of calls and puts for the same underlying that have the same expiration date and strike price. Strategy
Short Selling:
The initiation of sale of futures or shares with the intent of buying back/covering position at a reduced price to make a profit.
Short Squeeze:
Happens when a group or short selling traders are forced to cover their short position and there are not enough stock supply in the market thus resulting in a upward ‘squeeze’ of the prices.
Small Cap Stocks:
Firm with market capitalization of between $250 million to $1 billion.
Specialist:
A designated trader by the exchange with whose role is to fulfil trades by meeting the bid and ask prices using account of his own..
Speculator:
A market participant who bet on the directional move of a financial instrument, without a corresponding hedging postion and have no intention of taking delivery of the underlying.
Spike:
An short term up move of prices within a short period of time and fall back to its previous level.
Spread:
The price difference between the buying and selling prices of a financial instrument.
Stock:
Part ownership of company.
Stock Market:
Refers to a marketplace where market participants trade equities.
Stock Split:
The division of stock, which resulted in the net increase of the number of floating stocks in the market but market capitalization remains the same.
Stops:
Levels that are set by traders to close out their postions.
Straddle:
A trade strategy or position the involves a long (or short) put and a long (or short) call, in which both options have the same expiration date and exercise price.
Strangle:
A trade strategy or position of a long (or short) and put long (or short) call in which both options having different exercise prices and same expiration date.
Strike Price:
The exercise price of an option that is predetermined before the initiation of the option contract.
Support:
Based on past traded prices which indicate a level that market participant will enter to make purchases when the prices come close to the level.
Swings:
Movement of stock prices within a certain range.

Technical Analysis:
A study of past price movements, usually based on historical price chart and associated market information such as volume traded to draw inferences of the possible prices that comes after, i.e. a predication of future prices.
Theta:
Time decay of an option.
Time Decay:
Refers to the continuous reducing in value of the option from the time component as it approches the expiration date.
Time Premium:
Refer to that component of the option due to the time to expiration.
Time Value:
A component of the stock option that reflect how much time is left before the contract expires.
Triple Witching Day:
Refers to the 3rd Friday in the months of March, June, September and December. On these days, the U.S. equity options, indexes options and futures contracts expire on the same day.
Uncovered Option:
A naked (unhedged) option, in which the writer does not own underlying instrument.
Underlying Instrument:
A trading instrument or security subject to purchase upon exercise.
Undervalued:
A security selling below the value the market value analysts believe it is worth.
Upside:
The potential for prices to move up.
Vega:
The amount by which the price of an option changes with respect to unit change in volatility.
Volatility:
An indication of the price fluctuation of the equity, futures or options. Low volatilty implies more stable market prices and high volatility implies large changes in prices. See Volatility Spreads
Volume:
The number of shares traded.
Wasting Asset:
A financial instrument that loses value due to time decay as the instrument approaches the expiration date. Option fall into this category.
Whipsaw:
Fluctuation of prices, normally refer to fairly wide ranges and have tendencies of hitting stop levels set by traders.
Witching Day:
A day when two or more classes of options and futures expire.
Yield:
An investment's rate of return..
Zero Sum Game:
Refers to one person’s gain is another person’s lost.

Glossary of Option Terms (A to C) - Glossary of Option (A-C)

Glossary of Option Terms (D to H)  - Glossary of Option (D-H)

Glossary Option (I to Q) - Glossary of Option (I-Q)

Glossary of Option (R - Z)- Glossary of Option (R-Z)

Option Stock - Some Useful Information

Option Greeks - A Qualitative Explanation

Glossary of Option Terms from Reuters - Glossary page of Reuters

Chicago Board Option Exchange Glossary - Glossary page of CBOT

Investorswords Glossary - A website for very complete list of financial glossary.

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