A-setup
Entry & Exit Signals
A candidate that clears trend, setup, paycheck and calendar together. The only grade that earns full size.
Public glossary · 129 terms · EN / FR
Options & investing glossary Every word of the wheel, in plain English.
129 definitions written for the 41 Academy lessons that teach them, across 9 tracks — from your first put to the Greeks. C is the busiest letter with 14 terms; Trading basics brings the most vocabulary (29).
Terms defined
129
Tracks
9
Each term keeps its track’s colour
Lessons cited
41
Every term links to its lesson
Illustrated ideas
12
Payoffs, curves and cycles, drawn per term
Bilingual pairs
129
Terms with an English–French twin
01
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Each Academy track brings its own vocabulary. Pick one to filter the index below.
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Every term, A to Z
Search a word or a phrase from any definition — accents optional. Open a term for its illustration, related terms and a calculator to try it.
129 definitions
A
9 termsAmerican-style
The Expert Playbook
An option that can be exercised on any trading day up to and including expiration (most U.S. equity options).
Anchored VWAP
Entry & Exit Signals
The same calculation started from a date you choose — an earnings gap, a major swing low — so it spans weeks or months instead of one session.
Annualized yield on capital
The Full Wheel System
Your return scaled to a full year so trades of different lengths can be compared fairly: period return x 365 / days held.
Ask
Options Foundations
The lowest price a seller is willing to accept right now. A buyer pays around this.
Assignment
The Cash-Secured Put
When the put buyer exercises and you must buy the 100 shares at the strike.
At the money (ATM)
The Cash-Secured Put
A put whose strike is right at the current stock price — roughly 0.50 delta.
ATR
Entry & Exit Signals
Average True Range — Wilder's 14-day average of the true range, quoted in dollars. The stock's typical daily travel, gaps included.
B
7 termsBid
Options Foundations
The highest price a buyer is willing to pay right now. As a SELLER, this is roughly what you can collect if you sell immediately.
Bid-ask spread
Selection & Timing
The gap between the highest price a buyer will pay (bid) and the lowest a seller will accept (ask). You generally sell near the bid.
Bollinger Bands
Entry & Exit Signals
John Bollinger's envelope: a 20-period simple moving average with an upper and lower band two standard deviations away from it.
Borrow fee
Trading basics
The yearly rate a broker charges to lend shares for a short sale, accrued every day the short is open. Hard-to-borrow stocks can cost 20% a year or more.
Breakeven
The Cash-Secured Put
Strike minus premium — the share price at which, if assigned, you are exactly even.
Buy to close (BTC)
Risk Management & Defense
Buying back the put you originally sold, ending that obligation. You pay whatever the put is now worth.
Buy to cover
Trading basics
The purchase that closes a short sale: you buy back the shares you borrowed so they can be returned to the lender.
C
14 termsCall option
Options Foundations
An option whose owner can BUY 100 shares at the strike price. Calls gain value when the stock rises.
Called away
Assignment & Covered Calls
When the call buyer exercises and you must sell your 100 shares at the call strike. It happens when the stock finishes above the strike at expiration.
Capped upside
Assignment & Covered Calls
Once the stock passes your strike, you stop participating in further gains — your sale price is fixed at the strike. That is the price of the premium.
Cash reserve
Risk Management & Defense
Money you deliberately leave uncommitted so you can keep selling puts (or buy shares cheap) when the market is falling and premiums are fat.
Cash-secured put
The Cash-Secured Put
Selling a put option while holding enough cash to buy the 100 shares at the strike price if you are assigned. You collect the premium up front in exchange for agreeing to buy the stock at a price you chose.
Collar
Risk Management & Defense
Owning shares plus a long protective put (a floor) financed by a short covered call (a ceiling). Downside is capped, and so is upside.
Concentration
Risk Management & Defense
How much of your account rides on a single stock. High concentration means one earnings miss can dominate your whole year.
Confluence
Entry & Exit Signals
Several independent signals pointing the same way at once. No single indicator earns a trade; the stack does.
Cost basis
The Full Wheel System
What you effectively paid for shares after subtracting every premium collected — the true break-even on a wheeled stock.
Covered call
Assignment & Covered Calls
Selling a call option against 100 shares you already own. You collect a premium now and agree to sell your shares at the strike price if the stock is above it at expiration — the shares cover the obligation.
CPI print
Entry & Exit Signals
The Bureau of Labor Statistics' monthly consumer price index release, published at 8:30am ET around the middle of the month — the inflation number the whole rates market trades.
Credit put spread
Risk Management & Defense
Sell a put and buy a cheaper, lower-strike put. You collect a net credit, but the long put caps your maximum loss.
Credit spread
Trading basics
A vertical spread that pays you to open — the option sold is the pricier one. Max profit = the credit; max loss = width − credit.
D
9 termsDaily loss limit
Trading basics
A cap on how much you allow yourself to lose in one day. Reach it and trading stops until the next session.
Debit spread
Trading basics
A vertical spread that costs money to open — the option bought is the pricier one. Max loss = the debit; max profit = width − debit.
Deep in-the-money (ITM)
Risk Management & Defense
A short put whose strike is far above the current stock price — so it has large intrinsic value and assignment is very likely.
Defined risk
Risk Management & Defense
A position whose maximum loss is a fixed, known dollar amount, because a long option caps how far the loss can run.
Delta
The Cash-Secured Put
How much the option price moves per 1 dollar move in the stock; for short puts its absolute value approximates the chance of assignment.
Delta band
Selection & Timing
The target range of deltas you sell within — a consistent rule that replaces ad-hoc strike picking.
Divergence
Entry & Exit Signals
Price makes a new extreme and the oscillator does not. A warning condition about thinning momentum, never an entry by itself.
Drawdown
Trading basics
The fall from an equity peak to the low that follows, in dollars or percent. The maximum drawdown is the deepest one over a period.
E
7 termsEarnings
Selection & Timing
A company's quarterly results announcement — a scheduled, high-uncertainty event that can move the stock sharply.
EMA
Entry & Exit Signals
Exponential moving average — the same idea, but recent closes carry more weight via a multiplier of 2/(N+1), so the line turns sooner after a change of direction.
Ex-dividend date
Selection & Timing
The first trading day on which a stock trades without its next dividend. To receive the dividend you must buy the shares before the ex-dividend date; with US T+1 settlement, the ex-date and the record date are the same day.
Expectancy
Trading basics
The average result per trade: (win rate × average win) − (loss rate × average loss). Positive expectancy means the method made money per trade over that sample.
Expected move
Entry & Exit Signals
The one-standard-deviation range the option market has priced in for a given expiry: price x IV x the square root of DTE divided by 365.
Expiration
Options Foundations
The date on which an option contract ends. After the close on expiration day, an in-the-money option is normally exercised and an out-of-the-money option expires worthless — and the seller keeps the full premium.
Extrinsic (time) value
Options Foundations
Everything above intrinsic value — the price of the time and uncertainty left before expiration. This is the part that decays away.
F
2 termsFCF yield
Entry & Exit Signals
Free cash flow divided by market capitalisation. The cash the business actually throws off, expressed as a yield you can hold up against a Treasury.
FOMC
Entry & Exit Signals
The Federal Reserve's rate-setting committee. Eight scheduled meetings a year; the statement lands at 2:00pm ET, the press conference half an hour later.
G
4 termsGamma
The Expert Playbook
How fast delta itself changes as the stock moves. It is the acceleration behind delta.
Gamma risk
Entry & Exit Signals
How fast your delta changes as expiry approaches. In the final two weeks a small move in the stock swings the position far more than the remaining premium is worth.
Gap
Selection & Timing
A jump in price between one day's close and the next day's open, common after earnings — it can leap right past your strike.
Golden cross
Entry & Exit Signals
The 50-day SMA closing above the 200-day SMA on daily closes; the death cross is the same crossing downward. Lagging regime context, not an entry trigger.
H
1 termHistorical volatility (HV)
Options Foundations
How much the stock has ACTUALLY moved in the recent past. IV is the forecast; HV is the track record.
I
5 termsImplied volatility (IV)
Options Foundations
The market's forward-looking expectation of movement, derived from current option prices. Higher IV means richer premiums.
Intrinsic value
Options Foundations
The real, here-and-now value if the option expired this instant. Only ITM options have intrinsic value.
Iron condor
Trading basics
A short strangle with protection: sell an out-of-the-money put and call, and buy a further put and call. Four legs, two breakevens and a capped maximum loss.
IV percentile
Entry & Exit Signals
The share of the past year's trading days on which implied volatility closed below today's. More robust than IV rank, because a single freak spike cannot distort it.
IV rank
Selection & Timing
Current IV's position between its 52-week low and high: 100 x (current IV - low IV) / (high IV - low IV). A rank of 80 is 80% of the way through that range, not above 80% of past days.
L
9 termsLast
Options Foundations
The price of the most recent actual trade. Can be stale if the option has not traded in a while — trust bid/ask more.
LEAPS
The Expert Playbook
A Long-term Equity AnticiPation Security — simply an option that expires far in the future, often a year or more out.
Let it ride
The Cash-Secured Put
Choosing to hold an open position to expiration without adjusting it.
Leverage
Trading basics
Controlling a large position with little capital. A $2.45 call controls 100 shares for $245, so gains and losses are a much bigger percentage of the money put in.
Long call
Trading basics
Buying a call: the right to buy 100 shares at the strike until expiration. It profits above strike + premium at expiration; the most it can lose is the premium.
Long position
Trading basics
Owning shares (or contracts) you bought. It gains when the price rises; the most it can lose is what you paid.
Long put
Trading basics
Buying a put: the right to sell 100 shares at the strike until expiration. It profits below strike − premium at expiration; the most it can lose is the premium.
Long volatility
Trading basics
Positions that gain when the stock moves more than the market priced in, or when implied volatility rises — long straddles, long strangles and most long options.
Long-term
The Expert Playbook
Generally, shares held more than one year; gains are often taxed at lower long-term rates.
M
6 termsMACD
Entry & Exit Signals
The 12-period EMA minus the 26-period EMA, with a 9-period EMA of that line as its signal. Unbounded, so it has no fixed extremes.
Mark / Mid
Options Foundations
The midpoint between bid and ask. A fair estimate of the option's real value, and a sensible price to aim your limit order at.
Max loss
The Cash-Secured Put
(Strike minus premium) x 100 per contract — only if the stock somehow goes to zero.
Max profit
The Cash-Secured Put
Premium x 100 x contracts — the most you can make, earned if the put expires worthless.
Maximum adverse excursion (MAE)
Trading basics
The worst unrealized loss a trade showed while it was open. It shows how much heat entries take and whether stops sit in the right place.
Maximum favorable excursion (MFE)
Trading basics
The best unrealized profit a trade showed while it was open. Compared with the exit, it shows how much of the move was kept.
N
3 termsNaked call
Assignment & Covered Calls
Selling a call without owning the shares. The risk is theoretically unlimited, and it is not part of the wheel. Avoid it.
Net credit
The Cash-Secured Put
When the premium from the new put is larger than the cost to buy back the old one, so cash flows to you.
Notional
Risk Management & Defense
The full dollar value a position controls if you were assigned. For a cash-secured put it is strike x 100 x contracts — the cash actually on the hook.
O
4 termsOBV
Entry & Exit Signals
On-Balance Volume — Joe Granville's running total that adds a day's volume on an up close and subtracts it on a down close. Only the slope means anything.
Open interest
Selection & Timing
The total number of contracts of that option currently held open. Higher means a deeper, more active market.
Out of the money (OTM)
The Cash-Secured Put
A put whose strike is below the current stock price — it has no value if exercised today.
Overbought / oversold
Entry & Exit Signals
The classic 70 and 30 lines. Read them as speed readings, not instructions — in a strong trend they stop meaning what the textbook says.
P
11 termsP/E ratio
Entry & Exit Signals
Price divided by earnings per share. Meaningless on its own — only useful against the same stock's own history and its sector peers.
Pin risk
The Expert Playbook
Uncertainty at expiration when the stock closes right at your strike, so you do not know if you will be assigned.
Playbook
Trading basics
A written set of setups — what qualifies, the entry, stop, target and size. A review compares each trade with the setup it claimed to follow.
Poor-man's covered call (PMCC)
The Expert Playbook
Owning a deep in-the-money LEAPS call as a stock substitute and selling shorter-dated calls against it.
Position sizing
Trading basics
Choosing how many shares or contracts to trade so that the loss, if you're wrong, equals the amount you decided to risk.
Premium
The Cash-Secured Put
The cash the buyer pays you up front for the put. It is yours to keep forever.
Profit factor
Trading basics
Gross profit divided by gross loss. Above 1.0 the winners outweigh the losers; 1.5 means $1.50 won for every $1 lost.
Profit target
Entry & Exit Signals
A pre-set buy-back level — conventionally around 50% of the credit received — that closes the trade before its slowest and riskiest stretch.
Protective put
Risk Management & Defense
A long put you buy on shares you own — insurance that lets you sell at the put's strike no matter how far the stock falls.
Put
Options Foundations
An option whose owner can SELL 100 shares at the strike price. Puts gain value when the stock falls.
R
7 termsR-multiple
Trading basics
A trade's result divided by its initial risk (1R). Risk $200 and make $500: +2.5R. Lose the planned $200: −1R.
Realized loss
Risk Management & Defense
A loss that becomes final the moment you close the trade — as opposed to a paper loss that can still recover.
Realized P/L
The Full Wheel System
Profit or loss that is locked in — the position is fully closed and the cash is final.
Relative volume
Entry & Exit Signals
Today's volume divided by the average for the comparable period. RVOL 2.0 means twice the normal level of participation.
Risk per trade
Trading basics
The share of the account you accept losing on one trade if its stop or maximum loss is hit — commonly between 0.5% and 2%.
Roll (rolling)
The Cash-Secured Put
Closing your current put and opening a new one further out in time, usually as a single combined order.
RSI
Entry & Exit Signals
Relative Strength Index — J. Welles Wilder's 1978 oscillator, bounded 0-100, comparing average gains to average losses over the last 14 bars.
S
12 termsSell to open (STO)
Risk Management & Defense
Selling a brand-new put, which collects fresh premium and starts a new obligation.
Short selling
Trading basics
Selling borrowed shares now and buying them back later to return them. It gains when the price falls — and its loss has no ceiling if the price rises.
Short volatility
Trading basics
Positions that gain when the stock moves less than priced in and implied volatility falls — short straddles, strangles, iron condors and most premium selling.
Short-term
The Expert Playbook
Generally, a position held one year or less; gains are typically taxed at ordinary income rates in the U.S.
Slippage
Selection & Timing
The money lost to a wide spread or poor fill — the difference between the fair mid-price and the price you actually get.
SMA
Entry & Exit Signals
Simple moving average — the plain arithmetic mean of the last N closing prices, recalculated every day. Stable, slow, and the version used in the classic 50/200 signals.
Spread width
Trading basics
The distance between a spread's two strikes. Width × 100 is the most a one-contract vertical can ever be worth.
Squeeze
Entry & Exit Signals
Bandwidth — (upper − lower) / middle — falling to its lowest level in about six months of trading. Volatility has compressed and an expansion is due.
Stop-loss
Trading basics
A pre-set exit price that ends a losing trade. Its distance from the entry turns a dollar risk into a position size.
Straddle
Trading basics
A call and a put at the same strike and expiration. Bought, it profits from a large move in either direction; sold, it profits if the stock stays near the strike.
Strangle
Trading basics
A put and a call at different strikes and the same expiration, usually both out of the money. Sold, it profits from a quiet stock; bought, it profits from a big move either way.
Strike price
The Cash-Secured Put
The fixed price at which you have agreed to buy the 100 shares if assigned.
T
6 termsTail risk
Risk Management & Defense
The risk of rare, extreme moves living in the 'tails' of the bell curve — the events that look unlikely until the day they happen.
Theta
The Cash-Secured Put
The amount of value an option loses each day from the passage of time alone. As the seller, theta works in your favour.
Theta decay curve
The Expert Playbook
The shape of how an option loses value over time: gentle far out, steep in the final weeks.
Time decay
The Cash-Secured Put
The steady erosion of an option's price as expiration approaches, all else equal.
Total premium income
The Full Wheel System
Every dollar of premium you have collected from puts and calls, added up across the whole portfolio.
Trend structure
Entry & Exit Signals
The pattern of swing points: higher highs plus higher lows is an uptrend, lower highs plus lower lows a downtrend. Losing half the pair is the first warning.
U
2 termsUndefined risk
Trading basics
A position whose maximum loss isn't capped by another option — a short call, a short strangle. Brokers require more margin for it, and losses can be many times the premium collected.
Unrealized P/L
The Full Wheel System
Paper profit or loss on positions still open; it can still move before you close them.
V
6 termsVega
Entry & Exit Signals
How much an option's price moves per one-percentage-point change in implied volatility. Vega 0.10 means 10 dollars per contract for a 1-point IV move.
Vertical spread
Trading basics
Two options of the same type and expiration, one bought and one sold at different strikes. Both the profit and the loss are capped.
VIX
Entry & Exit Signals
CBOE's index of 30-day expected S&P 500 volatility, read from SPX option prices and quoted as an annualised percentage. It measures size of moves, never direction.
Volatility crush
Selection & Timing
The sudden drop in implied volatility right after an event resolves, deflating option premiums.
Volume
Selection & Timing
How many contracts traded today. High volume signals active, easy-to-trade options.
VWAP
Entry & Exit Signals
Volume-weighted average price for the current session: cumulative typical price x volume divided by cumulative volume, restarting every morning.
W
5 termsWash sale
The Expert Playbook
A rule that can disallow a loss if you buy back a substantially identical position within 30 days.
Wheel of death
Risk Management & Defense
Getting assigned shares high, then watching the stock keep falling while you sell calls below your cost — slowly bleeding as the position never recovers.
Wheel strategy
The Full Wheel System
An options income strategy that cycles between two trades: sell cash-secured puts until you are assigned the stock, then sell covered calls on those shares until they are called away — and start again, collecting a premium at every step.
Win rate
The Full Wheel System
The share of your closed positions that ended profitably — a measure of how often the strategy works, not how much it makes.
Wings
Trading basics
The two long options of an iron condor. They cost part of the credit and cap the loss at the wing width minus the credit.
03
Put the words to work
The glossary, the free tools and the Academy are one path: understand the word, price the trade, then track it.
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