Options Glossary: S


The Securities and Exchange Commission. The SEC is an agency of the federal government that is in charge of monitoring and regulating the securities industry.

Secondary market

A market where securities are bought and sold after their initial purchase by public investors.

Sector index

An index that measures the performance of a narrow market segment, such as biotechnology or small capitalization stocks.

Secured put / Cash-secured put

An option strategy in which a put option is written against a sufficient amount of cash (or Treasury bills) to pay for the stock purchase if the short option is assigned.

Series of options

Option contracts on the same class having the same strike price and expiration month. For example, all XYZ May 60 calls constitute a series.


The process by which the underlying stock is transferred from one brokerage account to another when equity option contracts are exercised by their owners and the inherent obligations assigned to option writers.

Settlement price

The official price at the end of a trading session. OCC establishes this price and uses it to determine changes in account equity, margin requirements and for other purposes. See also Mark-to-market.

Short option position

The position of an option writer that represents an obligation on the part of the option's writer to meet the terms of the option if its owner exercises it. The writer can terminate this obligation by buying back (cover or close) the position with a closing purchase transaction.

Short stock position

A strategy that profits from a stock price decline. It is initiated by borrowing stock from a broker-dealer and selling it in the open market. This strategy is closed (covered) later by buying back the stock and returning it to the lending broker-dealer.

Specialist / Specialist group / Specialist system

One or more exchange members whose function is to maintain a fair and orderly market in a given stock or a given class of options. This is accomplished by managing the limit order book and making bids and offers for their own account in the absence of opposite market side orders. See also Market maker and Market maker system (competing).


A stock dividend issued by one company in shares of another corporate entity, such as a subsidiary corporation of the company issuing the dividend.

Spread / Spread order

A position consisting of two parts, each of which alone would profit from opposite directional price moves. As orders, these opposite parts are entered and executed simultaneously in the hope of (1) limiting risk, or (2) benefiting from a change of price relationship between the two parts.

Standard deviation

A statistical measure of price fluctuation. One use of the standard deviation is to measure how stock price movements are distributed about the mean. See also Volatility.


Interchangeability resulting from standardization. Options listed on national exchanges are fungible, while over-the-counter options generally are not. Classes of options listed and traded on more than one national exchange are referred to as multiple-listed / multiple-traded options.

Stock dividend

A dividend paid in shares of stock rather than cash. See also Spin-off.

Stock split

An increase in the number of outstanding shares by a corporation through the issuance of a set number of shares to a shareholder for a set number of shares that the shareholder already owns. For example, a corporation might declare a 2-for-1 stock split. This means that for every share of stock an investor owns, he/she will be given another, thus owning two shares instead of one. There will be a corresponding reduction in equity value per share. In this case, the new shares (post-split) will be worth one-half their previous value but the investor will own twice as many shares.

Stop order

A type of contingency order, often erroneously known as a stop-loss order, placed with a broker. It becomes a market order when the stock trades, or is bid or offered, at or through a specified price. See also Stop-limit order.

Stop-limit order

A type of contingency order placed with a broker that becomes a limit order when the stock trades, or is bid or offered, at or through a specific price.


A trading position involving puts and calls on a one-to-one basis in which the puts and calls have the same strike price, expiration and underlying stock. When both options are owned, the position is called a long straddle. When both options are written, it is a short straddle. Example: a long straddle might be buying 1 XYZ May 60 call and buying 1 XYZ May 60 put.

Strike / Strike price

The price at which the owner of an option can purchase (call) or sell (put) the underlying stock. Used interchangeably with striking price or exercise price.

Strike price interval

The normal price differential between option strike prices. Exchange rules for strike intervals have changed over the years, and many stocks are now listed in $1 increments or smaller. In general, strike intervals in equity options are listed in $2.50 increments for strikes under $50 and in $5 increments from $50 up to $200. Over $200, strikes are listed in $10 increments. As mentioned, many stocks are now exempt from standard listing procedures and strike increments will vary.


A requirement that any investing strategy fall within the financial means and investment objectives of an investor or trader.


A term used in technical analysis to describe a price area at which falling prices are expected to stop or meet increased buying activity. This analysis is based on previous price behavior of the stock.

Synthetic long call

A long stock position combined with a long put of the same series as that call.

Synthetic long put

A short stock position combined with a long call of the same series as that put.

Synthetic long stock

A long call position combined with a short put of the same series.

Synthetic position

A strategy involving two or more instruments that have the same risk-reward profile as a strategy involving only one instrument.

Synthetic short call

A short stock position combined with a short put of the same series as that call.

Synthetic short put

A long stock position combined with a short call of the same series as that put.

Synthetic short stock

A short call position combined with a long put of the same series.

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