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Glossary

Short, plain-English definitions of the terms you will meet when studying options activity.

At the money (ATM): An option whose strike is at or very near the current price of the underlying.
Ask: The lowest price a seller is currently willing to accept.
Bid: The highest price a buyer is currently willing to pay.
Block trade: A large trade, often privately negotiated, printed as one transaction.
Call option: The right, not the obligation, to buy the underlying at the strike price before or at expiration.
Delta: How much an option's price is expected to change for a $1 move in the underlying (approximate).
DTE (days to expiration): Number of days left until the option expires.
Expiration: The date after which the option no longer exists.
Hedge: A position taken to reduce the risk of another position.
Implied volatility (IV): The market's expectation of future volatility, backed out of option prices. Higher IV means more expensive options.
In the money (ITM): A call with strike below the underlying price, or a put with strike above it.
IV crush: A sharp fall in implied volatility, typically after an event such as earnings.
Open interest (OI): Total contracts still open; updated once per day.
Out of the money (OTM): A call with strike above the underlying price, or a put with strike below it; has no intrinsic value.
Premium: The price of an option. Total premium = price × 100 × contracts (for standard US equity options).
Put option: The right, not the obligation, to sell the underlying at the strike price.
Spread: A position combining two or more options, e.g. buying one strike and selling another.
Strike price: The price at which the option can be exercised.
Sweep: An order split across multiple exchanges and filled rapidly, often at the ask or bid.
Theta: The estimated daily loss of an option's value from the passage of time.
Underlying: The stock, ETF or index the option is based on.
Unusual options activity (UOA): Options trading that is large relative to a contract's normal volume or open interest.
Volume: Number of contracts traded during the current session.