Options Glossary

Adjustments: Certain events such as a stock split or a stock dividend (e.g., a 3-for-2 stock split). An adjusted option may cover more than the usual one hundred shares. For example, after a 3-for-2 stock split, the adjusted option will represent 150 shares. For such options, the premium must be multiplied by a corresponding factor. Example: buying 1 call (covering 150 shares) at 4 would cost $600. See also Strike price interval
All-or-none order (AON): A type of option order which requires that the order be executed completely or not at all. An AON order may be either a day order or a GTC (good til cancel) order.
American-style option: An option that can be exercised at any time prior to its expiration date. See also European-style option
Arbitrage: A trading technique that involves the simultaneous purchase and sale of identical assets or of equivalent assets in two different markets with the intent of profiting by the price discrepancy.
Ask / ask price: The price at which a seller is offering to sell an option or a stock. See also Assignment
Assigned (an exercise): Received notification of an assignment by The Options Clearing Corporation. See also Assignment
Assignment: Notification by The Options Clearing Corporation to a clearing member that an owner of an option has exercised his or her rights there under. For equity and index options, assignments are made on a random basis by The Options Clearing Corporation. See also Delivery and Exercise
At-The-Money: A term that describes an option with a strike price that is equal to the current market price of the underlying stock.
Averaging down: Buying more of a stock or an option at a lower price than the original purchase so as to reduce the average cost.

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