**At-the-money**. This occurs when the price of the underlying asset is the same as the strike price of the option.

**ATM**. Abbreviation for "at the money".

**Contract Size**. Refers to the amount of the underlying asset. For stock options it is 100 shares per option.

**Exercise**. Electing to buy or sell the underlying security at the strike price.

**Expiration date**. The date on which the option expires.

**Implied volatility**. This is the estimation of the volatility of the underlying security during the life of the option.

**Intrinsic Value**. The amount of profit that would be realized if the option were to be exercised. This is determined by the amount that the option is in-the-money.

**In-the-money**. For a call option this means that the price of the underlying asset is above the strike price of the option. For a put option this means that the price of the underlying asset is below the strike price of the option. This is sometimes abbreviated as "ITM".

*Example*: If a stock is trading at $54 then a call option with a strike price of $50 would be in the money by $4 and a put option with a strike price of $60 would be in the money by $6.

**Near-the-money**. "Near-the-money" is a more informal term meaning that the price of the underlying is near the strike price.

**Out-of-the-money**. For a call option this occurs when the price of the underlying asset is below the strike price of the option. For a put option this means that the price of the underlying asset is above the strike price of the option. This is sometimes abbreviated as "OTM". Out-of-the-money options have only time value and no intrinsic value.

*Example*: If a stock is trading at $54 then any call option with a strike price above $54 would be out-of-the-money. And any put options with a strike price below $54 would be out-of-the-money.

**OTM**. Abbreviation for "out of the money".

**Premium**. To the buyer, this is the cost of the option. To the writer, this the amount of money received for selling the option.

**Strike price**. The price at which the option can be exercised. Also, the price at which the option begins to build intrinsic value.

**Time Value**. The value of the time remaining before expiration. Also, the portion of the value that exceeds intrinsic value. At expiration the time value is always zero.

**Weeklys**. Options that only have one week of time value when they are listed.

Types of Stocks

IPOs

IPO fraud

Trading IPOs

Poison Pill

Bond Prices

Bond Risks

Types of Bonds

Muni Bonds

Terminology

Types of Options

Options Terminology

Advantages & Disadvantages

Options Valuation

Implied Volatility