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Numerical Terms
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S
At The Money - The Strike nearest the current price of the Underlying.
Secondary Market -
A market that provides for the purchase or sale of previously sold or bought options through closing transactions.
Series -
All option contracts of the same class that also have the same unit of trade, expiration date and strike price.
Settlement Price -
The official price at the end of a trading session. This price is established by The Options Clearing Corporation and is used to determine changes in account equity, margin requirements, and for other purposes. See also Mark-to-market.
Short Position -
A position wherein a person's interest in a particular series of options is as a net writer (i.e., the number of contracts sold exceeds the number of contracts bought).
Specialist -
An exchange member whose function it is to both make markets--buy and sell for his own account in the absence of public orders--and to keep the book of public orders. Most stock exchanges and some option exchanges utilize the specialist system of trading.
Spread Order -
An order to simultaneously transact two or more option trades. Typically, one option would be bought while another would simultaneously be sold. Spread orders may be limit orders, not held orders, or orders with discretion. They cannot be stop orders, however.
Spread Strategy -
Any option position having both long options and short options of the same type on the same underlying security.
Standard Deviation -
A measure of the volatility of a stock. It is a statistical quantity measuring the magnitude of the daily price changes of that stock.
"Static" Return -
The return that an investor would make on a particular position if the underlying stock were unchanged in price at the expiration of the options in the position.
Stop-Limit Order -
Similar to a stop order, the stop-limit order becomes a limit order, rather than a market order, when the security trades at the price specified on the stop. See also Stop Order.
Stop Order -
An order, placed away from the current market, that becomes a market order if the security trades at the price specified on the stop order. Buy stop orders are placed above the market while sell stop orders are placed below.
Straddle -
The purchase or sale of an equal number of puts and calls having the same terms.
Strangle -
Strategy -
With respect to option investments, a preconceived, logical plan of position selection and follow-up action.
Strike Price -
The stated price per share for which the underlying security may be purchased (in the case of a call) or sold (in the case of a put) by the option holder upon exercise of the option contract.
Striking Price Interval -
The distance between striking prices on a particular underlying security. Normally, the interval is 2.50 points for stocks under $25, 5 points for stocks selling over $25 per share, and 10 points (or greater) is acceptable for stocks over $200 per share. There are, however, exceptions to this general guideline.
Sub-Index -
See narrow-based index.
Suitability -
A requirement that any investing strategy fall within the financial means and investment objectives of an investor.
Suitable -
Describing a strategy or trading philosophy in which the investor is operating in accordance with his (her) financial means and investment objectives.
Support -
A term in technical analysis indicating a price area lower than the current price of the stock, where demand is thought to exist. Thus a stock would stop declining when it reached a support area. See also Resistance.
Synthetic Put -
A strategy equivalent in risk to purchasing a put option where an investor sells stock short and buys a call.
Synthetic Stock -
An option strategy that is equivalent to the underlying stock. A long call and a short put is synthetic long stock. A long put and a short call is synthetic short stock.
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