Friday, February 5, 2010

Stock Option Trading Terms for Ladies Only

Ladies, during the past week, I've been swimming in the sea of stock option terminology found at Investopedia. I'm trying to do something while I am gainfully unemployed, and option trading was the flavor of the week.

If you had employer-issued options, once upon a time. Option price, strike price, expiration dates .... those are the basic terms used in stock options trading. You may have needed to know these terms when you received or exercised a stock option from your employer, if you were so lucky. Beyond saying that options allow you to buy and sell what you may or may not own, I barely understand options myself.

Wait til Cosmo hears about these goodies. Today, my investigation has unearthed some options terms that have left me speechless. Now I'm convinced the options trading back room must be an interesting place to have, or, better yet, overhear a conversation.
Disclaimer. You may blush when reading some of these terms and my comments, which are not to be confused with definitions. And please don't blame me. I'm only the messenger. Besides, if your daughter is considering a career in options trading, you will certainly want to speak her language. Well, maybe not.
Here we go ........
Alligator spread - not to be confused with the bear call spread, the bull call spread, the backspread, the frontspread, the gutspread, or the cat spread

Bullet dodging - understandable, perhaps

Contango - a Latin dance? would one ever do the contango while bullet dodging?

Country basket - okay, so options traders have read Little Red Riding Hood?

Cum rights - no, I promise I am not making this up

Double no touch option - we ladies all know what that means

Double one touch option - hmmmmmmmmmmmm, okay but just once, well, maybe twice

Down and in option - there's also a down and out option in case you were wondering

Exercise backdating - if this is what I think it is ... I need to backdate enough exercise for at least the last decade

Exotic option - need I say more?

Iron butterfly - In-A-Gadda-Da-Vida baby ... the long version, truly

Knock out option - knock out, meaning "hot babe" or "just pummeled my opponent out in the back alley"

Long jelly roll - perhaps a jelly donut shaped like a maple bar

Married put - obviously options traders may be married, and unfortunately, no swinging singles put (or call) options are noted

Multi-leg option - before the married put?

Naked put - also noteworthy are the naked call and naked options

Outperformance option - really? wow...

Overhang - what happens if you eat too many long jelly rolls and fail to use exercise backdating to correct long periods without exercise

Piggyback warrants - Jessica Rabbit would be sad at the lack of pattycake warrants

Plain vanilla - the opposite of the exotic option, presumably

Quadruple witching - there is also triple witching, if you want to reduce risk

Roll back - other rolling options are roll forward, roll down, or roll up ... really, roll up?

Seagull option - Invented by the Mormon pioneers, perhaps?

Strangle - this is also called the squeeze option, if you prefer

Strap - ahem ... these terms just go on and on

Strip - noooooooooooooo ...

STRIPE - swap transferring risk with participating element ... huh?

Witching hour - the time when you may engage in triple or quadruple witching activities

Yes, all of the above are unquestionably financial terms that you might need to use in a sentence on the trading floor. So now that I have exhausted everyone with my non-exhaustive list of stock options terms, I will leave everyone with a final thought: Wow. Finance is so very much more than I ever dreamed.

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