An index is a measurement of the sum total of prices calculated with a weighting of different percentages among a group of stocks, to provide an indication and consistent measure of the overall market performance.
It usually refers to a measure of change in the market. This market change is assessed by traders to measure how much an index has fallen from the previous day.
The underlying of an option contract is a stock, ETF, or index that the option contract trades against. The price movement and volatility of the underlying affects the pricing of the option throughout its life span.
A market maker or liquidity provider is a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn. The U.S. Securities and Exchange Commission defines a ‘“market maker’” as a firm that stands ready to buy and sell stock on a regular and continuous basis at a publicly quoted price.
The Exchange Traded Funds that replicate a target index's performance (e.g., S&P 500 or commodities, foreign markets, etc). ETFs trade like stock, have lower fees than mutual funds, and many have tradable options.[click to read more]
A derivative on an index product that gives the holder the right, but not the obligation, to buy or sell a basket of stocks depending on if the investor is holding call or put respectively. Index options are typically settled in cash basis only.[click to read more]
Term used for every third Friday or March, June, September and December. Volatility generally increase drastically on these days as these days are expiration days of Index futures and options, Stock Futures and Options.[click to read more]
The expiry of stock options, index future's options and index futures. The markets see very high volumes on these dates and used to be on third Friday in the months of March, June, September, and December before 2001. After 2001, Triple Witching was replaced by Quadru[click to read more]
The measurement of fluctuation in underlying stock of an option. It's the historical measurement of price movement of a given stock, index or a country's whole economy over a given time period.[click to read more]