Option Trading Terminology

My market maker friend DVH used to always say option trading is the closest thing to professional sports. With the NFL football season kicking off tonight I thought it would be a good time to review option terminology to see if his assessment is really true.

Hang time – Waiting for the market to open.

Ineligible Receiver – Not approved for complex strategies.

Down – How you feel after a losing trade.

First Down – First losing trade.

Punt – The act of closing out a losing trade.

Intentional Grounding – Throwing mouse at flat screen after punt.

Play Clock – Time decay.

Pylon – What some pit traders try to do.

Roll-Out – You calendar spread traders do this all of the time.

Third and Long – You’re bullish and the market turns bearish.

Stiff Arm – Overtrading.

Fair Catch – Breakeven.

Safeties – Puts.

Hand off – Friend watching your position while you’ve gone fishin’.

Home Field Advantage – Trading out of your house.

Personal Foul – Trading out of your house in boxer shorts.

Man in Motion – Constantly changing your market forecast.

Nickel Defense – Buying back your short options for a plain nickel.

Offside – Option position put on too early.

In the Pocket – Taking money out of your trading account.

Wild Card – Crazy, big risk taking trader.

Snap – If you trade out of your comfort zone you will.

Cover 2 – Trading 2 covered calls.

Audible – Adjusting a losing trade.

Incomplete Pass – No trade.

Double Coverage – Two protective puts.

1st Round Pick – A trade that never lived up to lofty expectations.

(In Chicago this is called a “Benson”. Also commonly referred to as a “Leaf” or “Bosworth”)

Yep, DVH was right! Trading is just like professional sports. Enjoy the football season and may all your trades be good ones!