The Complete Guide to Option Strategies: Advanced and Basic Strategies on Stocks, ETFs, Indexes, and Stock Indexes

Glossary

all-or-none order A market or limit order that is to be executed in its entirety or not at all. If you place a straight limit order for more than one contract, you may be filled on a portion of your order. To prevent this from occurring, you can place an all-or-none limit order, so that you will not be filled unless you are executed on all options at your limit price or better.

A.M. settlement A settlement style in which the exercise settlement value of an index option is determined based on the opening prices of the component securities.

American-style option An option that can be exercised on or before the expiration date.

ask See bid/ask.

assignment The receipt of an exercise notice by an option writer that obligates the writer to sell (in the case of a call) or buy (in the case of a put) the underlying instrument. For an index, an assignment obligates the writer to pay (in the case of a call or put) the exercise settlement amount.

at-the-money An option with a strike price that is the same as, or closest to, the current trading price of the underlying stock. For example, if XYZ stock is trading at $100 per share, the May 100 call and May 100 put are at-the-money. If XYZ stock is trading at $99 per share, the May 100 call and May 100 put options are still considered at-the-money.

automatic exercise An option that will be exercised automatically on the option expiration date if it is in-the-money by a specified amount, absent instructions to the contrary.

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