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Glossaries

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TermDefinition
option Delta

A ratio which compares the volatility of the option price to the volatility of the underlying stock price. For every $1 a stock price changes, the option value changes with the value of Delta.

option premium

The purchase price of an option contract, which is also the income received by the writer (seller) of the option contract. The quoted premium is a per share value, so multiply by 100 to calculate the total premium.

out-of-the-money

If the underlying stock price is below the strike price (for calls) or above the strike price (for puts). This means that exercising the option will not earn you money.