A form of vesting that takes place at a faster rate than the initial vesting schedule in a company's stock option plan. This allows the option holder to…

The physical commodity that underlies a futures contract or is traded in the physical market. This is the homogeneous commodity that is the basis for…

1. An option's strike price after adjustments have been made for stock splits to its underlying security.2. A term used to describe the strike prices…

The strike price of a put or call option multiplied by its contract size. Aggregate exercise prices are used to determine the dollar amount required should…

An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market movements. An alligator…

An official notification from an options clearing firm to the writer of an option that the current option holder has exercised and, therefore, the writer…

An option that can be exercised anytime during its life. The majority of exchange-traded options are American. Since investors have the freedom to exercise…

A form of option contract from the "mountain range" series of exotic options. Annapurna options offer a combination of a fixed coupon rate and participation…

An option whose payoff depends on the average price of the underlying asset over a certain period of time as opposed to at maturity. Also known as an…

An option feature whereby a reference price is activated at the end of an option should the underlying fall below a specified average before option expiry…

An option payoff that is equal to the asset's price if the asset is above the strike price, otherwise the payoff is zero. These types of options don…

An option payoff that is equal to the asset's price if the asset is below the strike price, otherwise the payoff is zero. These types of options don…

The act of clearing houses and brokerages selecting short option and future contract holders to deliver underlying securities or commodities of maturing…

A futures contract with a provision permitting the contract holder to convey his or her rights of assignment to a third party. This enables the contract…

1. The transfer of an individual's rights or property to another person or business. 2. A notice received by an option writer stating that the option…

An option is at-the-money if the strike price of the option equals the market price of the underlying security. For example, if XYZ stock is trading…

A type of equity-based exotic option from the family of mountain range options. Atlas options have a payout that is based on the performance of the underlying…

An electronic funds-transfer system run by the National Automated Clearing House Association. This payment system deals with payroll, direct deposit…

A procedure implemented to protect an option holder where the Option Clearing Corporation will automatically exercise an "in the money" option for the…

A type of option where the payoff is either zero or the amount by which the average price of the asset exceeds the strike.The average price of these…

A type of option where the payoff is either zero or the amount by which the strike price exceeds the average price of the asset.The average price of…

The premium charged upon the second term or portion of a compound option. In other words, the back fee is the fee paid by the owner of a compound option…

A type of options spread in which a trader holds more long positions than short positions. The premium collected from the sale of the short option is…

An option whose notional payments increase significantly after a set threshold is broken. Commonly used in foreign exchange markets, these options provide…

A type of option whose payoff depends on whether or not the underlying asset has reached or exceeded a predetermined price. A barrier option is a type…

A type of option whose underlying asset is a basket of commodities, securities, or currencies. A currency basket option provides a cheaper method for…

A type of options strategy used when a decline in the price of the underlying asset is expected. It is achieved by selling call options at a specific…

A type of options strategy used when an option trader expects a decline in the price of the underlying asset. Bear Put Spread is achieved by purchasing…

1. An option strategy seeking maximum profit when the price of the underlying security declines. The strategy involves the simultaneous purchase and sale…

A type of option that can only be exercised on predetermined dates, usually every month. Like the mixed culture of Bermuda, bermuda options are a combination…

A swaption with predefined limitations on exercise. Like a Bermuda option, a Bermuda swaption can only be exercised at certain times during its life.

The process of consolidating swap agreements between two parties into a single agreement. As a result, instead of each swap agreement leading to a stream…

A type of option in which the payoff is structured to be either a fixed amount of compensation if the option expires in the money, or nothing at all if…

An options valuation method developed by Cox, et al, in 1979.  The binomial option pricing model uses an iterative procedure, allowing for the specification…

A graphical representation of possible intrinsic values that an option may take at different nodes or time periods. The value of the option depends on…

A model of price variation over time of financial instruments such as stocks that can, among other things, be used to determine the price of a European…

A variation of the Black-Scholes model that allows for the valuation of options on futures contracts. In 1976, Fisher Black, one of the developers of…

An option contract in which the underlying asset is a bond. Other than the different characteristics of the underlying assets, there is no significant…

An arrangement made between a buyer and seller giving either party the ability, at some future date, to determine the cash price of the forward sales…

The process of closing out a position in a swap contract or another OTC derivative agreement prior to maturity.The position is closed by taking an offsetting…

An all-electronic equity derivatives exchange launched on February 6, 2004, as a joint effort by the Montreal Exchange, Boston Stock Exchange and Interactive…

A dual option position involving a bull and bear spread with identical expiry dates. This investment strategy provides for minimal risk. Additionally…

1. In general, the point at which gains equal losses. 2. In options, the market price that a stock must reach for option buyers to avoid a loss if they…

A type of options strategy used when a moderate rise in the price of the underlying asset is expected. It is achieved by purchasing call options at a…

A type of options strategy that is used when the investor expects a moderate rise in the price of the underlying asset. This strategy is constructed by…

An option strategy in which maximum profit is attained if the underlying security rises in price. Either calls or puts can be used. The lower strike price…

An bullish strategy used by investors who feel that the market price of a commodity will appreciate but wish to limit the downside potential associated…

A form of option granting in which the award of options is delayed until a piece of bad news becomes known to the public and the stock's price falls. Because…

The act of purchasing an "in the money" put option so that the buyer can capitalize on a bear market by effectively shorting a stock without waiting for…

An option strategy combining a bull and bear spread. It uses three strike prices. The lower two strike prices are used in the bull spread, and the higher…