Slingshot: a butterfly spread with an extra long out-of-the-money call option if bullish or an extra short out-of-the-money put option if bearish.
Christmas Tree: an options trading strategy that purchases and sells six call options or six put options with different strike prices for the same expiration dates.
Broken Winged Butterfly: a long butterfly spread with long strike prices that are not equidistant from the short strike price.
Jade Butterfly: a spread that combines a short put option and a short call spread that yields a credit greater than the width of the short call spread.
Buy-Write: a risk position where an investor or trader purchases an asset and simultaneously writes (sells) a call option on the asset.
Covered Call: a risk position where an investor or trader purchases an asset and simultaneously writes (sells) a call option on the same amount of the asset purchased.
Covered Put: a risk position where an investor or trader sells an asset short and simultaneously writes (sells) a put option on the same amount of the asset sold.
Cash Secured Put: the sale of a naked or short put option while simultaneously putting aside the cash to purchase the asset at the strike price if the price of the asset is below the strike price at expiration.
Long/Short Premium: long premium is a net credit of cash premium from a group of option sales and purchases. Short premium is a net debit of cash premium from a group of options purchases and sales.
Collars: a bearish collar is buying a downside put option and selling an upside call option on the same amount of an asset to protect against a falling price. A bullish collar is buying an upside call option, and selling a downside put option on the same amount of an asset to protect against a rising price.
Risk Reversal: a hedging strategy that protects a long or short position using a combination of put and call options. A reversal or reverse conversion is an arbitrage strategy that can result in a riskless profit when options are under prices compared to the underlying asset.
The Wheel: a systematic approach to sell cash-secured put options, and upon assignment of the long position to sell covered calls, repeating the process after assignment against the short call. Repeating the process is often called turning the wheel.
Order Types:
- FOK (fill or kill): an order to buy or sell an asset immediately or cancel the order if the entire order cannot be executed. No partial fulfillments are allowed.
- IOC (immediate or cancel): an order to buy or sell an asset immediately or cancel the balance of the order if the entire order cannot be executed. Partial fulfillments are allowed.
- AON (all or none): an order to buy or sell an asset that must be executed immediately in its entirety or not executed at all. AON orders that cannot be executed immediately remain active until they are executed or canceled.
- OCO (one cancels other): a pair of conditional orders stipulating that if one order executes, the other order is automatically canceled.
- OTO (one triggers other): a contingent order with primary and secondary orders. When the primary order executes, the secondary order is triggered automatically.
- OT-OCO (one triggers, one cancels other): a primary order which, if executed, triggers two secondary orders. If either of the secondary order is executed it automatically cancels the other.
- Stepper (step up, walk up, etc.): an order placed in a market to be the best bid to buy or the best offer to sell. Also known as step-up, step-down, walk-up, walk down, flash, or pre-routing orders.
- Wagon order: a limit or market order that activates after a specified number of contracts or shares trade in the marketplace at a specified price. The number of contracts is cumulative, so many transactions could occur until the volume traded reaches the level that triggers the order.
- Pile on order: a limit or market order that activates after a single trade of a defined size or volume occurs at a specified price level.
- Implied Vol. Order: an order to buy or sell based on an option trading at a specified implied volatility level.
- Bracket Order (multiple profit and stop orders in one): a market order placed during intraday trading only. Bracket orders combine a buy order with a stop-loss and target order. Bracket orders assist traders in squaring off a favorable risk position by the end of a trading day.
- Trigger (conditional on a set of user-defined parameters): a buy or sell order that only becomes valid under a specific condition. Once the condition is reached, the trigger order becomes a market order unless otherwise specified.
- Trailing Stops: An order designed to lock in profits or limit losses. Trailing stops only move if the price moves favorably. A trailing stop is a stop order that can be a limit or market order.
- Advanced Trailing Stops: a trailing stop order paired with another order type that sets additional conditions that trigger the order.
- Stop-Loss: an order to buy or sell a specific asset when it reaches a specified price. When a market reaches the stop loss level, the order becomes a market order and can be executed at the market price even if it differs from the stop loss level.
- Stop Limit: A stop-loss order with a specified price limit. When an asset price reaches the stop level, the order becomes a limit order that can only execute at the stop limit level or better.
- GTC: an order to purchase or sell an asset that is good until canceled and remains active until either the order is executed or the order is explicitly canceled.
- Day: an order to buy or sell an asset that expires at the end of the trading day if not executed.
- Limit: an order to buy or sell an asset with a restriction on the maximum price for a buy or a minimum price for a sale.
- Market: an order to purchase or sell an asset immediately at the market price. A market order guarantees execution but not execution price.
- Auto Trade: a trading plan based on buy and sell orders automatically placed based on an underlying system or program.