Options Trading Glossary

Description: Options Glossary, Uncovered call option writing, Uncovered Call Writing,Uncovered Option,Uncovered put option writing

Uncovered call option writing

A short call option position in which the writer does not own an equivalent position in the underlying security represented by his option contracts.

Uncovered Call Writing

A short call option position in which the writer does not own an equivalent position in the underlying security represented by his option contracts.

Uncovered Option

Uncovered Option is also known as a naked option - a written option is considered to be uncovered if the investor does not have an offsetting position in the underlying security. This is a much riskier strategy than a covered option.

Uncovered put option writing

A short put option position in which the writer does not have a corresponding short position in the underlying security or has not deposited, in a cash account, cash or cash equivalents equal to the exercise value of the put.

Uncovered Put Writing

A short put option position in which the writer does not have a corresponding short position in the underlying security or has not deposited, in a cash account, cash or cash equivalents equal to the exercise value of the put.

Underlying Instrument

A trading instrument subject to purchase upon exercise.

Underlying Security

The security subject to being purchased or sold upon exercise of the option contract.

Undervalued

Describing a security that is trading at a lower price than it logically should. Usually determined by the use of a mathematical model.

Unit of Trading

The minimum quantity or amount allowed when trading a security. The normal minimum for common stock is 1 round lot or 100 shares. The normal minimum for options is one contract (which normally covers 100 shares of stock).

Upside

The potential for prices to move up. Upside break-even The upper price at which a trade breaks-even.

Variable Delta

A delta that can change due to the change of an underlying asset or a change in time expiration of an option.

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