239Glossary
credit spread Any spread creating higher premium in-
come than cost.
current market value The market value of stock or of
options.
debit spread Any spread creating lower premium income
than cost.
deep in the money Status of options more than 5 points
above the strike price of the call or below the strike price
of the put.
deep out of the money Status of options more than 5
points below the strike price of the call or above the strike
price of the put.
diagonal spread A calendar spread with both long and
short positions containing different strike prices and expi-
ration dates.
exercise Buying stock under the terms of the call or sell-
ing stock under the terms of the put.
expiration date The date when options becomes worth-
less, specified in the option contract.
expiration time The latest possible time to place an order
on an option on the last trading day.
extrinsic value The non-intrinsic premium of options not
specifically related to time; a reflection of perceived stock
volatility and potential for profit.
hedge The use of one position to offset another, such as
options used to protect stock positions.

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