American Options – Options that can be exercised anytime on or before the options expiry date.
ASXC (ASX Clear) – ASX Clear is the clearing and settlement facility for all exchange traded options, LEPOs and futures traded on the ASX.
ATM (At-the-Money) – An option that has a strike price that is the same or very close to the market price of the underlying share.
Bollinger Band – A band plotted two standard deviations away from a simple moving average, developed by famous technical trader John Bollinger.
Delta – the amount by which an option’s price will change for a corresponding change in price by the underlying entity. Call options have positive deltas, while put options have negative deltas.
European Options – Options that can only be exercised on the options expiry date.
Implied Volatility – A measure of the volatility of the underlying stock, it is determined by using prices currently existing in the market at the time, rather than using historical data on the price changes of the underlying stock.
ITM (In-the-Money) – An option that has intrinsic value. A call option is ITM if the market price of the underlying shares is above the strike price of the option; a put option is ITM if the market price of the underlying shares is below the strike price of the options.
Margins – an amount determined by the regulator and broker as necessary to cover the risk of financial loss on an options contract due to an adverse market movement.
OTM (Out-of-the-Money) – An option with no intrinsic value. A call option is OTM if the market price of the underlying shares is below the exercise price of the option; a put option is OTM if the market price of the underlying shares is above the strike price of the options.