Stock Options Vocabulary 3
Put: a type of stock option that gives its holder the right to sell 100 shares of stock for a specified option price which can be exercised for a specified period.
Restricted Stock Option or Restricted Stock: is a term used to describe an employee stock option that has certain restrictions imposed by the employer.
Secondary Market: is the market where the previously sold and bought stock options are re-sold through closing transactions.
Series: consists of option contracts that are of the same class with the same strike price, expiration date and unit of trade.
Short position: a position by which an investor sells more stock options compared to those that he buys in the same series of options.
Strike price: is the price per share of stock in which the call option holders can buy the underlying stock or the put option holders can sell the underlying stock.
Stockbroker: a person licensed by the National Association of Securities Dealers (NASD) to sell and the buy stocks.
Technical Analysis: is a type of analysis which solely relies on stock prices and volume history in buying and selling stocks.
Thinly traded: a term used to describe a stock that a low average in trading.
Time Value: is part of the option premium that takes into account the time left before the option contract expires.
Triple Witching: the day when certain stock options, index future options and index futures all expire which is at the third Friday of March, June, September and December.
Type: the classification of the stock option as either put or call.
Uncovered Call Option Writing: is a short call option position in which the writer of the call option does not own the equivalent underlying stock of the call option.
Uncovered Put Option Writing: is a short put option position in which the writer of the put option does not own the equivalent underlying stock of the put option.
Undervalued Stocks: is a kind of stock that has a lower price than what it should be.
Underlying Security: is the security that can be either sold or bought if the option contract is exercised.
Unexercised option: when an option is not exercised or implemented by the holder.
Upgrade: are issued by analysts when they change their opinion of a stock in a positive light which normally increases a stock’s price.
Uptrend: a term used when the stock prices are increasing.
Value investors: are those investors that look for stocks that are undervalued with the hopes that their stock prices would increase in the future.
Venture Capitalists: are capitalists that have first invested in corporations that have not yet gone public.
Volatility: the propensity of a stock to fluctuate and change prices.
Volume: the quantity of shares of stock that are traded in a specific period of time, usually one day.
Wall Street: is a street in Manhattan where the New York Stock Exchange is located; also a term used to describe anything connected with stocks, stock exchange or money.
Wall Street gibberish: the technical terms or concepts used in the stock market. This is also called stock market jargon.
Wilshire 5000: is one of the most inclusive United States Index which monitors 6,700 stocks.
Writer: a person that sells the option contract.
Writing: the process by which the writer creates the option contract.