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Numerical Terms
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A
American-Style Option - An option contract that may be exercised at any time between the date of purchase and the expiration date. Most exchange-traded options are American-style.
Arbitrage - The process in which professional traders simultaneously buy and sell the same or equivalent securities for a riskless profit.
Ask Price - The price at which a seller is offering to sell an option or stock.
Assignment - The receipt of an exercise notice by an option writer (seller) that obligates him to sell (in the case of a call) or purchase (in the case of a put) the underlying security at the specified strike price.
At-the-money - An option is at-the-money if the strike price of the option is equal to the market price of the underlying security.
Automatic Exercise - A protection procedure whereby the Options Clearing Corporation attempts to protect the holder of an expiring in-the-money option by automatically exercising the option on behalf of the holder.
Average Down - To buy more of a security at a lower price, thereby reducing the holder's average cost. (Average Up: to buy more at a higher price.)
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