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Numerical Terms
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R
At The Money - The Strike nearest the current price of the Underlying.
Ratio Calendar Combination -
A strategy consisting of a simultaneous position of a ratio calendar spread using calls and a similar position using puts, where the striking price of the calls is greater than the striking price of the puts.
Ratio Calendar Spread -
Selling more near-term options than longer-term ones purchased, all with the same strike; either puts or calls.
Ratio Spread -
Constructed with either puts or calls, the strategy consists of buying a certain amount of options and then selling a larger quantity of more out-of-the-money options.
Ratio Strategy -
A strategy in which one has an unequal number of long securities and short securities. Normally, it implies a preponderance of short options over either long options or long stock.
Ratio Write -
Selling of call options in a ratio higher than 1 to 1 against the stock that is owned.
Resistance -
A term in technical analysis indicating a price area higher than the current stock price where an abundance of supply exists for the stock and therefore the stock may have trouble rising through the price. See also Support.
Return (on investment) -
The percentage profit that one makes, or might make, on his investment.
Return if Exercised -
The return that a covered call writer would make if the underlying stock were called away.
Reversal Arbitrage -
A riskless arbitrage that involves selling the stock short, writing a put, and buying a call. The options have the same terms. See also Conversion Arbitrage.
Risk Arbitrage -
A form of arbitrage that has some risk associated with it. Commonly refers to potential takeover situations where the arbitrageur buys the stock of the company about to be taken over and sells the stock of the company that is effecting the takeover. See also Dividend Arbitrage.
Roll Down -
Close out options at one strike and simultaneously open other options at a lower strike.
Roll Forward (Out) -
Close-out options at a near-term expiration date and open options at a longer-term expiration date.
Rolling -
A follow-up action in which the strategist closes options currently in the position and opens other options with different terms, on the same underlying stock. See also Roll Down, Roll Forward, and Roll Up.
Roll Up -
Close out options at a lower strike and open options at a higher strike.
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