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Glossary of Options And Futures Related Terms: A-B




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This article is from the Investing Articles: Stocks and Options series.

Glossary of Options And Futures Related Terms: A-B

American-Style Option

An option contract that may be exercised at any time between the date of purchase and the expiration date. Most exchange-traded options in the United States are American-style.

Arbitrage

The simultaneous purchase and sale of identical or equivalent financial instruments or commodity futures in order to benefit from a discrepancy in their price relationship.

Assignment

The receipt of an exercise notice by an option writer (seller) that obligates him to sell (in the case of a call) or purchase (in the case of a put) the underlying security at the specified strike price.

At-The-Money

An option is at-the-money if the strike price of the option is equal to the market price of the underlying security. Back Months The futures or options on futures months being traded that are furthest from expiration. Bear One who believes prices will move lower.

Call

An Option contract that gives the holder the right to buy the underlying security at a specified price for a certain, fixed period of time.

Bear Market

A market in which prices are declining.

Bid

The price that the market participants are willing to pay

Bull

One who expects prices to rise.

Bull Market

A market in which prices are rising.

Buy On Close

To buy at the end of a trading session at a price within the closing range.

Buy On Opening

To buy at the beginning of a trading session at a price within the opening range.

 

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