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Options glossary
Definitions and starting points for the option terms used across Mark
Foundations
What do in the money, at the money, and out of the money mean?Learn how an option's strike compares with the underlying price and why the meaning differs for calls and putsRead guide What happens when an option expires?Understand why the last trading day, exercise style, automatic exercise, and broker rules all matterRead guide What is a call option?Learn the right a call buyer holds, the obligation a call seller takes, and what the strike meansRead guide What is a put option?Learn the right a put buyer holds, the obligation a put seller takes, and what the strike meansRead guide What is an option contract multiplier?Understand why an option premium is commonly multiplied by 100 and why contract terms must still be checkedRead guide
Pricing & Greeks
How does time decay change an option target?Learn why the stock price required for an option target can rise as expiration approachesRead guide How to calculate an option break-even priceUse contract terms to find an expiration break-even and distinguish it from a profitable exit before expirationRead guide Using delta, theta, and vega to manage an options positionRead directional, time, and volatility sensitivity together instead of relying on one GreekRead guide What are intrinsic value and time value in options?Understand the two components that can make up an option premium before expirationRead guide What is an option break-even point?Learn why a break-even point is normally stated at expiration and can differ from an earlier checkpointRead guide What is option delta?Learn what delta estimates, why it is not a guarantee, and why it changes with the optionRead guide What is option gamma?Understand gamma as the rate at which delta changes when the underlying price movesRead guide What is option vega?Learn how vega estimates an option's sensitivity to a change in implied volatilityRead guide What is rho in options?Understand how rho estimates an option's sensitivity to interest rates and when the effect matters moreRead guide What is theta in options?Learn what option theta estimates, why time decay is not linear, and how expiration changes the resultRead guide What stock price does my call need to reach?See which assumptions are needed to estimate the underlying price behind a call option targetRead guide
Volatility
How to read options volatility before and after earningsInterpret event-driven implied volatility, expected move, and post-report repricing without treating them as forecastsRead guide How to research options around a company's earningsUse a repeatable ticker-level checklist for earnings date, option terms, volatility, and position riskRead guide IV Rank vs IV PercentileCompare two historical implied-volatility measures and the different question each one answersRead guide What happens to options after earnings?Learn why an option can lose value after earnings even when the stock moves in the expected directionRead guide What is an options expected move?Understand the range implied by option prices, its time horizon, and why it is not a price targetRead guide What is implied volatility crush?Understand why implied volatility often falls after earnings and how that can change an option premiumRead guide What is implied volatility in options?Learn what implied volatility measures, what it does not predict, and why it changes option premiumsRead guide What is IV Percentile?Learn how IV Percentile compares today's implied volatility with observations in a selected lookback periodRead guide What is IV Rank?Understand how IV Rank places current implied volatility within a selected historical high-low rangeRead guide
Strategies
How to calculate covered call yieldCalculate premium yield and assigned return while keeping stock downside and assignment in viewRead guide What is a bear call spread?Understand the defined-risk call credit spread for a view that the stock stays below a chosen strikeRead guide What is a bear put spread?See how buying a higher-strike put and selling a lower-strike put limits both cost and potential profitRead guide What is a bull call spread?Understand the defined debit, capped upside, and expiration tradeoffs of buying one call and selling anotherRead guide What is a bull put spread?Learn how a credit put spread seeks limited premium while using a lower-strike put to limit downsideRead guide What is a calendar spread?Understand a spread that uses options with different expirations and why time and IV matter togetherRead guide What is a cash-secured put?Learn the obligation behind a short put, the role of reserved cash, and why the premium does not eliminate downside riskRead guide What is a covered call?Understand how owning stock and selling a call creates income, a capped upside, and assignment exposureRead guide What is a long straddle?Understand why buying a call and put at the same strike needs a large move to overcome both premiumsRead guide What is a long strangle?Learn how a long strangle trades a lower upfront cost for more distant break-even pricesRead guide What is a protective put?Learn how a long put can set a defined stock-price floor through expiration while retaining stock upsideRead guide What is an iron condor?Learn how two credit spreads form a range with capped profit and capped loss at expirationRead guide What is an options collar?Learn how stock, a protective put, and a covered call set a floor and ceiling for a holdingRead guide
Trading & risk
Closing vs exercising an optionLearn how selling to close differs from exercising and why remaining time value matters to the decisionRead guide Ex-dividend dates and option assignment riskLearn why short calls can face higher early-assignment risk before an ex-dividend dateRead guide How to size an options position using maximum lossTurn contract-level maximum loss into an account-level position limit without treating the estimate as a promiseRead guide Market order vs limit order for optionsCompare execution certainty, price control, bid-ask spreads, and fill risk when ordering optionsRead guide What are 0DTE options?Learn why same-day expiry options have little time remaining and can change sensitivity very quicklyRead guide What do open interest and liquidity tell you about an option?Understand the difference between outstanding contracts, trading activity, and the ability to transact near a fair priceRead guide What does rolling an options position mean?Understand how a roll closes one option and opens another, and why it does not erase an existing lossRead guide What is an option bid-ask spread?Learn what the bid and ask represent, why their difference matters, and how it can affect an executionRead guide What is early option exercise?Learn why an option holder may exercise before expiration and why sellers cannot know the exact timingRead guide What is option assignment?Learn why a short option can create a share-delivery or share-purchase obligation before or at expirationRead guide What is pin risk in options?Understand why a stock near the strike at expiration can leave assignment and the resulting position uncertainRead guide