Uncovered Options Trading System

Options Autotrading
101 trades were issued in 2017-20
only 4 red

Options Trading Glossary


Lag

The number of data points that a filer, such as a moving average, follows or trails the input price data.

Last Trading Day

The very last full day of open trading before an options expiration day, usually the third Friday of the expiration month. Note: If the third Friday of the month is an exchange holiday, the last trading day will be the Thursday immediately preceding the third Friday.

Leaps

Long-term Equity Anticipation Securities, which are options with maturities longer than one year.

Leg

One side of a spread. Thi is a risk-oriented method of establishing a two-sided position. Rather than entering into a simultaneous transaction to establish the position (a spread, for example), the trader first executes one side of the position, hoping to execute the other side at a later time and a better price. The risk materializes from the fact that a better price may never be available, and a worse price must eventually be accepted. This is, of course, a higher-risk method of establishing a spread position.

Leg Out

In rolling forward in futures, a method that would result in liquidating a position.

Letter of Guarantee

A letter from a bank to a brokerage firm which states that a customer (who has written a call option) does indeed own the underlying stock and the bank will guarantee delivery if the call is assigned. Thus the call can be considered covered. Not all brokerage firms accept letters of guarantee. Also: letter issued to O.C.C. by member firms covering a guarantee of any trades made by one of its customers, (a trader or broker on the exchange floor).

Leverage

A term describing the greater percentage of profit or loss potential when a given amount of money controls a security with a much larger face value. For example, a call option enables the owner to assume the upside potential of 100 shares of stock by investing a much smaller amount than that required to buy the stock. If the stock increases by 10 percent, for example, the option might double in value. Conversely, a 10 percent stock price decline might result in the total loss of the purchase price of the option. A call holder has leverage with respect to a stock holder - the former will have greater percentage profits and losses than the latter, for the same movement in the underlying stock.

Limit Move

The maximum daily price limit for an exchange traded contract.

Limit Order

A trading order placed with a broker to buy or sell stock or options at a specific price. A limit order may also be placed "with discretion". In this case, the floor broker executing the order may use his (her) discretion to buy or sell at a set amount beyond the limit if he (she) feels it is necessary to fill the order.

Limit Up, Limit Down

Commodity exchange restrictions on the maximum upward or downward movements permitted in the price for a commodity during any trading session day.

Liquid Market

A trading environment characterized by high trading volume, a narrow spread between the bid and ask prices, and the ability to trade larger sized orders without significant price changes.

Liquidity

The ease with which an asset can be converted to cash in the marketplace. A large number of buyers and sellers and a high volume of trading activity provide high liquidity.

Listed Option

A put or call option that is traded on a national options exchange. Listed options have fixed striking prices and expiration dates.  In contrast, over-the-counter options usually have non-standard or negotiated terms.

Local

A trader on a futures exchange who buys and sells for his own account and may sometimes also fill public orders.

Locked Market

A market where trading has been halted because prices have reached their daily trading limit.

Lognormal Distribution

A statistical distribution that is often applied to the movement of stock prices. It is a convenient and logical distribution because it implies that stock prices can theoretically rise forever but cannot fall below zero.

Long

The term used to describe the buying of a security, contract, commodity, or option.

Long Option Position

The position of an option purchaser (owner) which represents the right to either buy stock (in the case of a call) or to sell stock (in the case of a put) at a specified price (the strike price) at or before some date in the future (the expiration date). It results from an opening purchase transaction e.g., long call or long put.

Long Position

A position wherein an investor's interest in a particular series of options is as a net holder (i.e., the number of contracts bought exceeds the number of contracts sold).

Long Stock position

A position in which an investor has purchased and owns stock.

Long-Dated Options

In English, this means calls and puts with an expiration as long as thirty-nine months. Currently, equity LEAPS have two series at any time with a January expiration. For example, in October 2000, LEAPS are available with expirations of January 2002 and January 2003.

Low (lo)

This is the lowest price paid for a stock during a certain period.

Low Risk Investing

A trade which is hedged for purposes of limiting price loss as opposed to a directional trade where loss is unlimited.

Make a Market

A market maker stands ready to buy or sell a particular security for his/her own account to keep the market liquid.
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