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. |
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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. |
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American-style option: An option that can be exercised at any time prior to its expiration date. |
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AMEX / ASE: American Stock Exchange. |
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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. |
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Ask / ask price: The price at which a seller is offering to sell an option or a stock. |
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Assigned (an exercise): Received notification of an assignment by OCC. |
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Assignment: Notification by OCC 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 OCC. |
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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. |
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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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