Options come with a lot of shorthand. Here are the terms you'll meet when logging a contract, in plain language, with the common synonyms. For the how-to, see Logging options trades.
The instrument
- Call — an option that profits when the underlying rises. Also “call option.”
- Put — an option that profits when the underlying falls. Also “put option.”
- Underlying — the stock or ETF the option is based on (e.g. AAPL). In the form this is the Symbol.
- Strike — the price at which the option can be exercised. Also “strike price” or “exercise price.”
- Expiration — the date the contract expires. Also “expiry” or “expiration date.”
- Premium — the price of the option, quoted per share. One contract covers 100 shares, so the cash amount is premium × 100 × contracts. In the form this is the Entry / Exit premium.
- Contract — one option = 100 shares of the underlying (the “contract size” or “multiplier”). Your Contracts field is the number of these.
Opening and closing (order actions)
- DTE — Days To Expiration. Also “days to expiry” or “time to expiration.”
- BTO — Buy To Open — open a long position by buying the option (you pay the premium, a debit). Also “going long” or “buying a call/put.” In the form this is Long.
- STO — Sell To Open — open a short position by selling the option (you receive the premium, a credit). Also “writing” an option, “selling premium,” or “shorting.” In the form this is Short.
- STC — Sell To Close — close a long position by selling it back. The exit for a BTO.
- BTC — Buy To Close — close a short position by buying it back. The exit for an STO.
Moneyness & value
- ITM — In The Money — the option has intrinsic value (call: underlying above strike; put: below).
- ATM — At The Money — strike ≈ the underlying's current price.
- OTM — Out of The Money — no intrinsic value yet (call: underlying below strike; put: above).
- Intrinsic value — how far ITM the option is right now.
- Extrinsic value — the rest of the premium: time + volatility. Also “time value.” It decays toward zero by expiration.
- Break-even — the underlying price where the trade nets zero at expiry (call: strike + premium; put: strike − premium). Shown on the Option Plan card.
How a position ends
- Exercise — the holder converts the option into the underlying stock at the strike.
- Assignment — the short side is obligated to fulfill an exercise (deliver or buy the stock). The result is a stock position — log it as a separate trade.
- Expire worthless — the option expires OTM at $0. A long loses the full premium; a short keeps it. The Expired worthless button records this.
Chain & quote terms
- Bid / Ask — the best price buyers will pay / sellers will accept. Their gap is the spread.
- Mid — the midpoint of bid and ask; a fair estimate of fill price. The chain picker fills this as your premium.
- Volume — contracts traded today.
- OI — Open Interest — contracts currently outstanding (a liquidity gauge). Distinct from volume.
- IV — Implied Volatility — the market's expected volatility priced into the option. Higher IV = richer premium.
The Greeks (risk sensitivities)
- Delta — how much the option price moves per $1 move in the underlying.
- Gamma — how fast delta itself changes.
- Theta — daily time decay (how much value the option loses per day, all else equal).
- Vega — sensitivity to a 1-point change in implied volatility.
- Rho — sensitivity to interest-rate changes (usually minor).
Structure
- Debit vs credit — a debit trade costs you premium (BTO); a credit trade pays you premium (STO).
- Covered vs naked — a short option backed by the underlying (or cash) is “covered”; unbacked is “naked.”
- Leg — one option in a position. A multi-leg position (a spread, condor, straddle or calendar) combines several legs; Ledger of Alpha records up to eight of them as one trade — see Multi-leg option structures.