Options Trading for the Conservative Investor: Increasing Profits Without Increasing Your Risk

GLOSSARY

annualized basis

a calculation of return on an option strategy, adjusted to reflect that return as if the position had been open for one year.

at the money

the status of an option when its strike price is equal to the stock's current market value.

average down

a technique for reducing net basis in stock as part of a rescue strategy; by purchasing shares at current market price, the overall basis in the stock is reduced so that option strategies can be employed to create a net profitable outcome.

call

an option providing the buyer with the right, but not the obligation, to purchase 100 shares of a specified stock, at a specified strike price and by an expiration date, and obligating a seller to deliver 100 shares at a fixed strike price if and ...