Glossary/ Options
Options
Underlying
The instrument a derivative is written on — an index or a stock.
Where this comes up
Lessons that use the term in context, which is usually more useful than the definition on its own.
- Gaps, and what fills them — Empty space on a chart, and the three kinds of it.
- Read the payoff before the price — Maximum loss, maximum gain and breakeven, in one picture.
- What you are paying for — Intrinsic and time value, separated properly.
- Delta, in plain language — How much the option moves when the underlying moves.
Nearby terms
Delta · Expiry · Greeks · Implied volatility · Intrinsic value · Open interest