long option position
81covered put — The sale of a put option while holding sufficient cash to buy the underlying. American Banker Glossary A put option position in which the option writer also is short the corresponding stock or has deposited, in a cash account, cash or cash… …
82bull spread — In most commodities and financial instruments, the term refers to buying the nearby month, and selling the deferred month, to profit from the change in the price relationship. Chicago Board of Trade glossary The purchase of near month futures… …
83Risk Graph — A two dimensional graphical representation that displays the profit or loss of an option at various prices. The x axis represents the price of the underlying security and the y axis represents the potential profit/loss. Often called a profit/loss …
84Sell To Open — A phrase used by many brokerages on the street to represent the opening of a short position in option transactions. An investor can sell to open either (or a combination of) puts or calls and thus will be holding the option(s) short. The… …
85Short hedge — The sale of a futures contract( s) to eliminate or lessen the possible decline in value ownership of an approximately equal amount of the actual financial instrument or physical commodity.Related: Long hedge. The New York Times Financial Glossary …
86Buy To Open — A term used by many brokerages to represent the opening of a long call or put position in option transactions. A buy to open order has a distinguishing characteristic where the option position is not held short in the account during the… …
87Put-Call Parity — A principle referring to the static price relationship, given a stock s price, between the prices of European put and call options of the same class (i.e. same underlying, strike price and expiration date). This relationship is shown from the… …
88covered call — A short call option position in which the writer owns the number of shares of the underlying stock represented by the option contracts. Covered calls generally limit the risk the writer takes because the stock does not have to be bought at the …
89Delta Hedging — An options strategy that aims to reduce (hedge) the risk associated with price movements in the underlying asset by offsetting long and short positions. For example, a long call position may be delta hedged by shorting the underlying stock. This… …
90conversion — The sale of a cash position and investment of part of the proceeds in the margin for a long futures position. The remaining money is placed in an interest bearing instrument. This practice allows the investor/dealer to receive high rates of… …
