8. ๐Ÿ“– Glossary/Terminology

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General Options and Unusual Whales Terminology

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โ„น๏ธ For more, visit the Investopedia Market Dictionary

  • % Diff: the percentage difference between an underlying and strike price.

  • 0 DTE (0 days to expiration): refers to an option that expires the day in question.

  • Ask: ‘The ask price represents the minimum price that a seller is willing to take for that same security.’ The ๐Ÿ›๏ธ Ask-side emoji signifies that the transaction(s) were on the ask side. When consider an alert with the Ask-side emoji, always verify within the alert itself!

  • Bearish Premium ๐Ÿป: premium derived from ask-side puts or bid-side calls.

  • Bid: ‘The bid price represents the maximum price that a buyer is willing to pay for that same security. The ๐Ÿฆด Bid-side emoji signifies that the transaction(s) were on the bid side. When consider an alert with the Ask-side emoji, always verify within the alert itself!

  • Bid-Ask Spread: “The bid-ask spread is the difference between the highest price that a buyer is willing to pay for an asset and the lowest price that a seller is willing to accept.”

  • Bullish Premium ๐Ÿ‚: premium derived from ๐Ÿ›๏ธ ask-side calls or ๐Ÿฆด bid-side puts.

  • Buy to Open (BTO)/Buy to Close (BTC): “Buy to open is a term used by brokerages to represent the establishment of a new (opening) long call or put position in options.” “Buy to close is used when a trader is net short an option position and wants to exit that open position.” You can find out more information here: 4 Ways to Trade Options. Also see STO/STC.

  • Cash Covered Put: “Selling (also called writing) a cash covered put option allows an investor to potentially own the underlying security at a future date and at a much more favorable price. In other words, the sale of put options allows market players to gain bullish exposure, with the added benefit of potentially owning the underlying security at a future date and at a price below the current market price.”

  • Covered Call: “A covered call refers to a financial transaction in which the investor selling call options owns an equivalent amount of the underlying security. To execute this an investor holding a long position in an asset then writes (sells) call options on that same asset to generate an income stream.”

  • ๐Ÿ”ฎ Dark pool: “A dark pool is a privately organized financial forum or exchange for trading securities. Dark pools allow institutional investors to trade without exposure until after the trade has been executed and reported.”

  • In The Money (ITM): “In the money is an expression that refers to an option that possesses intrinsic value. A call option is in the money (ITM) if the market price is above the strike price. A put option is in the money if the market price is below the strike price. An option can also be out of the money (OTM) or at the money (ATM). In-the-money options contracts have higher premiums than other options that are not ITM.”

  • LEAPS: “๐Ÿข LEAPS, or Long-term Equity Anticipation Securities, are publicly traded options contracts with expiration dates that are longer than one year, and typically up to three years from issue.” It’s not uncommon to see traders refer to 9 months+ as the threshold period for labeling something as a ‘LEAPS’ contract.

  • Levels:

  • Multileg: “A multi-leg options order is an order to simultaneously buy and sell options with more than one strike price, expiration date, or sensitivity to the underlying asset’s price. Multi-leg options orders allow traders to carry out a complex options strategy that involves several different options contracts with a single order. Multi-leg options orders save traders time and usually money, as well. Traders will often use multi-leg orders for complex trades where there is greater uncertainty in the trend direction.” “A common multi-leg options order is a straddle, wherein a trader buys both a put and a call at or near the current price.” Also see Spread.

  • Open Interest (OI): “Open interest is the total number of outstanding contracts.” OI is not updated during the trading day.

  • Out of The Money (OTM): “Out of the money is an expression used to describe an option contract that only contains extrinsic value. An OTM option only has extrinsic value. A call option is OTM if the underlying price is trading below the strike price of the call. A put option is OTM if the underlying’s price is above the put’s strike price. An option can also be in the money or at the money.

  • P/C Ratio: the Put/Call Ratio compares the total number of puts and calls traded. The put-call ratio is calculated by dividing the number of traded put options by the number of traded call options.

  • Roll:

  • Runner:

  • Spread: “An options spread is an options trading strategy in which a trader will buy and sell multiple options of the same type โ€“ either call or put โ€“ with the same underlying asset. These options are similar, but typically vary in terms of strike price, expiry date, or both.” You can find more information here: Which Vertical Option Spread Should You Use? Also see Multileg.

  • Side:

  • Spot: The Spot price of a transaction is the price at which the transaction occurred.

  • STO/STC: “Sell to open, or STO, is the opening of a short position on an option by a trader.” “Sell to close, or STC, indicates that an options order is being placed to exit a trade.” You can find out more information here: 4 Ways to Trade Options. Also see BTO/BTC.

  • Theta gang: “What is theta gang? Simply put, these are options trading strategies that capitalize on the fact that the prices of options decay over time. Instead of trying to predict if a stock will go up or down, you simply play the time gameโ€“ collecting premium which turns to profit as time goes by, then rinsing and repeating.”

  • Volume: Volume refers to the total number of contracts that have traded hands over the course of the day. ‘Volume’ updates as new trades take place.

๐ŸŒŠ Flow Legend
  • Cross: A cross trade occurs when a broker executes matched buy and sell orders for the same security across different client accounts and reports them on an exchange. These transactions are typically happening peer-to-peer, and are often the result of one MM offloading a position to another. These trades offer no indication as to directionality.
  • Floor: A trade executed by a floor trader, an exchange member who executes transactions from the floor of the exchange, exclusively for their own account
  • Sweep: A sweep-to-fill order is a type of market order in which a broker splits the order into numerous parts to take advantage of the order sizes at the best prices currently offered on the market

๐Ÿ”ฎ Dark Pool Sold/Trade Codes: polygon.io
  • AveragePriceTrade: A trade where the price reported is based upon an average of the prices for transactions in a security during all or any portion of the trading day.

  • ContingentTrade: A transaction where the execution of the transaction is contingent upon some event.

  • PriorReferencePrice: A sale condition that identifies a trade based on a price at a prior point in time, i.e., more than 90 seconds prior to the time of the trade report. The execution time of the trade will be the time of the prior reference price.

  • QualifiedContingentTrade: A transaction consisting of two or more component orders executed as agent or principal where the execution of one component is contingent upon the execution of all other components at or near the same time and the price is determined by the relationship between the component orders and not the current market price for the security.

For more on Contingent Orders