credit spread Any spread creating higher premium in-
come than cost.
current market value The market value of stock or of
debit spread Any spread creating lower premium income
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-
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.