- Strike
- The price at which an option lets you buy or sell the asset — the "deal level", fixed in advance.
- Expiration
- The date the option "burns out". After it the right disappears and the outcome is settled for good.
- Premium
- The price of the option itself: what you pay for the "reservation" when buying, or receive when selling it.
- Call and Put
- A call is the right to buy the asset, a put the right to sell. Calls bet on a rise, puts on a fall or for protection.
- In / At / Out of the money (ITM / ATM / OTM)
- How favourable the strike already is versus the current price: "in the money" already pays, "at the money" is near price, "out of the money" not yet.
- Debit and Credit
- A debit means you pay to open the position. A credit means cash lands in your account the moment you open it.
- Legs
- The individual options a construction is built from. A "two-leg" spread is two options in one position.
- Breakeven
- The asset price where you come out even — no profit, no loss. Beyond it the profit begins.
- IV — implied volatility
- The market's expectation of future price swings. The higher the IV, the pricier the options (they price in fear of big moves).
- Delta (Δ)
- How much the option's price moves if the asset moves $1. Roughly, "how much of the asset" your position holds right now.
- Theta (Θ)
- How much the option loses each day simply from time passing. For the buyer theta is an enemy, for the seller a friend.
- Vega (V)
- How much the option's price reacts to a change in volatility (IV). Rising IV lifts bought options and hurts sold ones.
- Gamma (Γ)
- How fast the delta itself changes — a kind of "acceleration" of the position as price moves.
- Rolling
- Moving the position to another strike or a later date, to extend it or rescue it after an adverse move.
- Delta-hedging
- Neutralising directional risk by buying or selling the asset (or a future) so the position depends less on price direction.