Options Trading Glossary

An option whose strike price is at or very close to the current price of the underlying stock.

Tagging each options print as buyer-initiated (executed at/above ask) or seller-initiated (at/below bid). The most important context for reading flow.

When near-term IV is higher than longer-term IV. Indicates short-term fear or a known catalyst.

The gap between the highest buy offer and lowest sell offer. Tight spreads = liquid contract. Wide spreads = illiquid, hard to fill.

Buy a higher-strike put + sell a lower-strike put, same expiration. Defined-risk bearish trade — cheaper than a naked put when IV is elevated.

Buy a lower-strike call + sell a higher-strike call, same expiration. Defined-risk bullish trade.

A strike with very large positive dealer gamma. Acts as resistance because dealers sell into rallies approaching it.

A second-order Greek — the rate at which an option's delta changes as time passes. Charm is strongest into expiration and on OPEX, where dealers re-hedging the delta of decaying options add a directional drift OptionsDeck flags as a 'charm ramp.'

OptionsDeck's term for the mid-sized dealer-gamma strikes between spot and the dominant wall. Price must clear each checkpoint before it can reach the wall, so they're useful intermediate targets and invalidation levels.

When longer-term IV is higher than near-term IV. Normal regime for equity options.

Sell a near-dated option and buy a longer-dated one at the same strike. Profits from faster front-month decay; net long vega, so it benefits when IV rises.

Long stock + a protective put + a short call against it. The short call's premium offsets (sometimes fully) the put's cost, so you cap upside at the call strike in exchange for defined downside at the put strike.

Holding 100 shares of stock and selling one call against it. Generates income but caps upside.

An options spread where you receive net premium upfront. Profits from time decay if the underlying stays on your side.

An options spread where you pay net premium upfront. Profits if the underlying moves in your direction.

The rate of change of an option's price per $1 move in the underlying. A 0.50-delta call moves $0.50 for every $1 the stock moves up.

A calendar spread with different strikes on each leg — different strike AND different expiration. The basis of the poor man's covered call: a deep-ITM long-dated (LEAPS) call plus a short near-dated call.

Number of calendar days until the option expires. 0DTE = expires today.

Off-exchange venue where large institutional trades execute without showing on the public tape until after the fact.

The average result you can expect per trade over a large sample: (win rate × average win) − (loss rate × average loss). Positive expectancy is the only thing that makes a strategy worth trading — a sub-50% win rate still compounds when the winners dwarf the losers. It's why OptionsDeck's backtester pairs Win Rate with Avg W/L instead of showing either alone.

The rate of change of delta. High-gamma options accelerate fast when the underlying moves.

The strike price where aggregate dealer gamma transitions from positive to negative. Above the flip → vol suppressed. Below → vol expansion.

When buying pressure forces market-maker hedging into stock purchases, accelerating the move upward in a self-reinforcing loop.

Aggregate dealer gamma position across all strikes. Drives intraday volatility character.

A price level where a gamma wall (GEX) aligns with a vol wall (VEX) within a tight band. Defended on both the price-hedging and vol-hedging axes, so it holds harder and rejects more decisively — OptionsDeck treats these as the strongest target and stop anchors.

A strike gap with little or no dealer gamma. Price tends to move fast through a gamma void because there's no hedging flow to slow it — the opposite of a wall. Shown as a thin band on the Exposure Grid.

Sensitivity metrics for an options position: delta (price), gamma (delta change), theta (time decay), vega (IV sensitivity), rho (rate sensitivity).

Realized volatility computed from past price moves. Compare to IV to see if options are cheap or expensive.

The market's expected one-standard-deviation move by a given expiration, computed from ATM straddle pricing.

Sell ATM straddle + buy protective wings. Pinned-to-strike premium-seller. Max profit if underlying expires exactly at short strike.

Sell OTM put spread + sell OTM call spread. Range-bound premium seller. Profitable if underlying stays inside the inner strikes.

Calls with strike below spot, or puts with strike above spot. Have intrinsic value.

The market's forward forecast of annualized volatility, derived from option prices.

Where current IV sits within the 52-week IV range, as a percent. 0 = at low, 100 = at high.

Percent of trading days in the last 252 where IV was at or below current. More robust than IV rank when there's been a single spike.

Position-sizing formula that maximizes long-run geometric growth. OptionsDeck's position sizer uses it as one input.

Long-term Equity AnticiPation Securities — options with roughly one to three years to expiration. Far slower theta decay and much higher vega than short-dated options; a deep-ITM LEAPS call is a capital-efficient stock replacement and the long leg of a poor man's covered call.

Pay premium for the right to buy stock at the strike. Unlimited upside, max loss = premium paid.

Pay premium for the right to sell stock at the strike. Profits from downside, max loss = premium paid.

Buy ATM call + buy ATM put. Long vol — profits on a large move in either direction.

Moving Average Convergence Divergence — momentum indicator. Bullish when MACD line crosses above signal line, bearish below.

The strike carrying the largest absolute dealer gamma — the level price gravitates toward as the session wears on, because dealer hedging pulls spot back to it. OptionsDeck surfaces the magnet and its distance from spot on the 0DTE scanner and Gravity Map.

The strike that minimizes the total dollar value of all in-the-money calls and puts at expiration — i.e. where the most options expire worthless. A mechanical pin magnet into OPEX-week settlement, computable with OptionsDeck's free max-pain calculator.

The largest peak-to-trough drop in account equity over a test or trading run, measured from a high-water mark down to the lowest point before a new high. It answers "how much pain would I have had to sit through?" — OptionsDeck's backtester reports it as Max DD so you can size positions to survive the worst stretch, not just chase the average return.

National Best Bid and Offer — the consolidated best bid and ask across all US exchanges at any millisecond.

Price is delivered through dealer-gamma structure in segments — it reacts at the nearest significant node first, not the largest far one. The basis for OptionsDeck's targeting: anchor to the nearest real node in your direction, treat further nodes as stretch targets.

Options expiring today. SPY, QQQ, SPX all have daily expirations. High gamma + high theta = wild swings.

Total number of outstanding contracts at a strike — open positions, not today's trades (that's volume). High OI = liquid, and it's the raw material under dealer-gamma walls and max pain. OptionsDeck's contract picker requires ≥25 OI to consider a contract fillable.

Monthly options expiration, typically the third Friday. Gamma unwinds, dealer hedging pressure releases, often pins indices into the close.

Calls with strike above spot, puts with strike below spot. No intrinsic value, all extrinsic.

The tendency of an underlying to gravitate toward a high-open-interest strike into expiration, as dealer gamma hedging dampens moves away from it. Strongest in the final hour of monthly OPEX, and closely related to max pain.

Statistical probability that a structure will be profitable at expiration. OptionsDeck computes via Monte Carlo.

The single strike carrying the largest dealer-gamma concentration on the board — the dominant level the whole gamma field is organized around. Marked ★ on the Exposure Grid; price gravitates toward it in compression regimes.

Gross profit divided by gross loss across a set of trades. >1 means the winners outweigh the losers; 2.0 means you made $2 for every $1 lost. OptionsDeck shows it on the backtester and trade journal — "∞" means a sample with no losing trades.

Long stock plus a long put as insurance. Caps downside below the put strike while keeping all upside; the cost is the premium paid — like buying a deductible policy on your shares.

A strike with very large negative dealer gamma. Acts as support because dealers buy into declines near it.

Put activity divided by call activity. Above 1 leans defensive, below ~0.7 leans greedy — but the extremes flip contrarian: peak put buying clusters near fear-driven lows, peak call buying near froth. Volume-vs-open-interest and equity-vs-index change the read entirely.

OptionsDeck's structural estimate of whether price actually taps a given dealer node this move. Because delivery is node-to-node, the nearest node carries the highest reach and each further node steps down. Distinct from a volatility-based probability-of-touch — it scores the path, not just the distance.

A real node has open interest that's building or holding (intent — a level price is drawn toward); a hedge node is large but far out-of-the-money with decaying OI (dealer protection price rarely reaches). Targeting a decaying hedge node is a top cause of a directionally-correct trade still losing.

Max profit divided by max loss — how much you stand to make per dollar at risk. A 2:1 setup pays $2 for every $1 risked. OptionsDeck enforces a 2:1 floor on AI ideas and shows R:R live in the strategy builder; "∞" means the upside is unbounded (e.g. a long call).

Probability of experiencing a critical drawdown given your win rate, position sizing, and trade count.

Multi-session migration of the dominant dealer levels. A rolling floor is put-wall support climbing across sessions (constructive — support building under price); a rolling ceiling is call-wall resistance pressing down (distributive). Both at once compresses the range.

The difference in implied volatility across strikes at one expiration. Equity-index puts usually carry higher IV than calls (downside fear) — 'put skew.' OptionsDeck's vol surface reports put- and call-skew in IV points vs ATM; flat or inverted skew is uncommon and often precedes a directional move.

An order that intentionally executes across multiple exchanges in the same second to fill size quickly. Strong signal of urgent institutional intent.

Rate of option value decay per day. Long options lose theta, short options collect it. Decay isn't linear — it accelerates into expiration.

OptionsDeck's 2-of-3 conviction gate. Three independent reads vote a direction — price action, order flow, and dealer positioning. Two or more agreeing is a high-conviction setup; a split tape (no two agree) is a single-pillar bet to size down or skip.

A second-order Greek — the sensitivity of delta to a change in implied volatility (equivalently, vega's sensitivity to spot). Vanna drives the vol-trigger feedback loop where falling IV forces dealers to buy and rising IV to sell; it dominates back-month dealer positioning.

Sensitivity of option price to a 1-point change in IV. Long options are long vega, short options are short vega.

A strike band with thin dealer gamma between two walls — price tends to travel through it fast because there's little hedging flow to slow it. OptionsDeck reports each pocket as a range with a width %, so you can size the expected acceleration.

Aggregate dealer vega position across all strikes — the vol-hedging analogue of GEX. Large VEX nodes act as 'vol walls' that resist price the way gamma walls do, but through dealers' volatility hedging. OptionsDeck overlays VEX on GEX to find Gamma × Vega confluence.

30-day forward IV of SPX. The 'fear gauge'. Spikes during stress.

VIX values across multiple horizons (VIX9D, VIX, VIX3M, VIX6M). Contango (near below far) is the calm baseline; inversion (near above far) signals near-term fear, often near a washout.

Rapid collapse in IV after a known event (earnings, FOMC). Why naked premium buyers around catalysts often lose even when right on direction.

The full three-dimensional map of implied volatility across every strike and expiration. Reading it surfaces skew (across strikes) and term structure (across time) at once. OptionsDeck renders it as an interactive surface with a flatness gauge and an IV-vs-HV premium readout.

Today's volume divided by total open interest at a strike. >2 means a position much larger than what already existed is being opened.

Out-of-sample simulation that progressively re-fits parameters on past data and tests on future data. OptionsDeck's backtester uses this approach.

An income loop: sell cash-secured puts to get assigned shares of a stock you want, then sell covered calls against them until they're called away — collecting premium at every step. Built entirely on assignment.

The percentage of closed trades that ended profitable. On its own it's misleading — a 70% win rate still loses money if the 30% of losers are oversized. Always read it next to Avg W/L and Expectancy. OptionsDeck surfaces win rate on the backtester, the paper-trading account, and the trade journal.

Your average winning trade divided by your average losing trade — the reward-to-risk you actually realize per trade, shown as Avg W/L on the OptionsDeck backtester. A ratio well above 1 means a sub-50% win rate can still be highly profitable; multiply it against Win Rate to get true Expectancy.