Traders Glossary

Explore, learn, and discover all trading-related terms here in our comprehensive glossary.

Good till Cancelled Order (GTC)

An order which continues until either it is filled or cancelled specifically by the trader.

Guts

A volatility strategy involving buying In the Money (ITM) Calls and ITM Puts. High volatility is required, after the position is opened, to make this a profitable strategy.

Hedge

A term for reducing the risk of one position by taking other positions with options, futures or other derivatives.

Hidden Leveraged Money

The Hidden Leveraged Money footprint comes from the Options Volatility Indicator (OVI) – a proprietary gauge of institutional options flow.

Historic Volatility

A measure of the price fluctuation of an asset averaged out over a period of time.A typical and popular period would be 21-23 trading days.

Implied Volatility

An indicator that measures the expensiveness of an option, the IV is the estimated volatility of a security's price.Typically, higher IV values reflect bearish sentiment and lower IV values reflect bullish sentiment.This is because bearish markets are considered more risky than bullish markets.

In the Money (ITM)

Where you can exercise an option for a profit.

In the Money (ITM) Calls

ITM Calls are where the current stock price is greater than the Call Strike Price.

In the Money (ITM) Puts

ITM Puts are where the current stock price is less than the Put Strike Price.

Index

A group of assets (often in a similar class of sector or market capitalisation) which can be traded as a single security.

Index Options

Options on the indexes of stocks or other securities.

Interest Rates

The rate at which borrowed money is charged by the lender, usually annualised into a percentage figure.

Intrinsic Value

The amount by which an option is in the money.

Iron Butterfly

See Iron Butterflies

Japanese Candlesticks

A popular method of visually depicting price bars where the open, high, low, close are shown explicitly.Upward moving price bars are hollow (or green if different colours are used).Downward moving price bars are filled (or red).Different looking bars and different clusters of price bars can lead to different interpretations of future price movements.

Key Levels

A Key Level footprint occurs when price crosses and holds an important support or resistance zone.

LEAPs

Long-term Equity AnticiPation Securities.These are long term stock options with expirations up to 3 years in the future. LEAPs are available in Calls and Puts and are American-style traded options.

Leg

One side or component of a spread

Leg in / Leg out

Legging into a spread entails the completion of just one component part of a spread with the intention of completing the other component parts at more favourable prices later on.Legging out of a spread entails the opposite whereby you exit your spread one component part at a time with the intention of doing so at more favourable prices as the underlying security moves in the anticipated direction.

LIFFE

London International Financial Futures and Options Exchange.