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Glossary of Options And Futures Related Terms: C




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

Glossary of Options And Futures Related Terms: C

Capped-Style Option

A capped option is an option with an established profit cap. The cap price is equal to the option's strike price plus a cap interval for a call option or the striike price minus a cap interva for a put option. A capped option is automatically exercised when the underlying security closes at or above (for a call) or at or below (for a put) the Option's cap price.

Class Of Options

Option contracts of the same type (call or put) and Style (American, European or Capped) that cover the same underlying security.

Close, The

The period at the end of the trading session. Sometimes used to refer to the Closing Range (or Range)

The high and low prices, or bids and offers, recorded during the period designated as the official close

Closing Purchase

A transaction in which the purchaser's intention is to reduce or eliminate a short position in a given series of options.

Closing Sale

A transaction in which the seller's intention is to reduce or eliminate a long position in a given series of options

Commission (or Round Turn

The one-time fee charged by a broker to a customer when a futures or options on futures position is liquidated either by offset or delivery.

Contract

Unit of trading for a financial or commodity future. Also, actual bilateral agreement between the parties (buyer and seller) of a futures or options on futures transaction as defined by an exchange.

Contract Month

The month in which futures contracts may be satisfied by making or accepting delivery.

Covered Call Option Writing

A strategy in which one sells call options while simultaneously owning an equivalent position in the underlying security or strategy in which one sells put options and simultaneously is short an equivalent position in the underlying security.

 

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