Options Glossary
Plain-English definitions of the core options terms behind our calculators — each one links straight to the tool that uses it.
How much an option's price moves for every $1 move in the stock, and a rough estimate of its probability of expiring in the money.
How much value an option loses per day purely from the passage of time.
How fast an option's delta itself changes as the stock price moves.
The market's forecast of how much a stock is likely to move, priced directly into the option.
The total number of option contracts currently open for a strike and expiration, and a rough proxy for how liquid it is to trade.
How much an option's price changes for every one percentage point move in implied volatility.
The sharp drop in implied volatility right after an event like earnings resolves, and why it can cost long-option traders money even on a correct call.
The Federal Reserve rule setting the standard 50% initial margin requirement, and the baseline most brokers build their own margin rules on top of.
Three lines on a price chart, a moving average plus an upper and lower band, that widen and narrow automatically as volatility changes.
The old rule limiting margin accounts under $25,000 to 3 day trades per 5 days, and the new intraday margin standard FINRA replaced it with in June 2026.
A number from -1 to +1 measuring whether two positions tend to move together, move oppositely, or move independently of each other.
A formula that calculates the position size that maximizes long-run account growth, given your win rate and payoff ratio.
A trade's result measured as a multiple of your own planned risk, so a $50 winner and a $50,000 winner can be compared on the same scale.