Options trading glossary: 48 terms explained for Indian markets
Every term an option chain, a payoff chart or these guides will show you, defined in a sentence or two, with a link to the guide that explains it in full.
By the EzyOptions Team · Updated 2026-10-12
A
- At the money (ATM)
- The strike nearest the current price of the underlying. ATM options carry the most time value and the highest Gamma and Theta. Read more
B
- Bear spread
- A two-leg position that profits from a fall with capped risk and capped reward, such as buying a put and selling a lower-strike put.
- Breakeven
- The underlying price at expiry at which a position neither makes nor loses money, after the premium paid or received. Read more
- Bull call spread
- Buying a call and selling a higher-strike call on the same expiry: a bullish view with a lower cost and a capped profit. Read more
C
- Call option (CE)
- A contract giving its buyer the right to buy the underlying at the strike price on the expiry date. Indian chains label calls CE. Read more
- Cash settlement
- Settling an option by paying its value in money rather than delivering the underlying. Index options always settle in cash. Read more
- Change in open interest
- How many contracts at a strike were opened (positive) or closed (negative) during the session. Read more
- Credit and debit
- A position that collects more premium than it pays opens for a credit; one that pays more than it collects opens for a debit.
D
- Delta
- The change in an option's premium for a one-point move in the underlying: 0 to 1 for calls, 0 to −1 for puts. Read more
E
- European option
- An option that can be exercised only on its expiry date. Every option on NSE and BSE, index or stock, is European style. Read more
- Exercise
- Using the right an option gives: buying at the strike for a call, selling at the strike for a put. Read more
- Expiry
- The date an option contract ends. NIFTY weekly options expire every Tuesday, or the previous trading day when that is a holiday. Read more
G
H
- Hedge
- A position taken to offset the risk of another, such as buying a put against a holding.
- Historical volatility
- How much the underlying actually moved over a past period, measured from its prices and annualised. Read more
I
- Implied volatility (IV)
- The volatility the market is pricing into an option, worked backwards from its premium and quoted as an annualised percentage. Read more
- In the money (ITM)
- A call whose strike is below the current price, or a put whose strike is above it: an option with intrinsic value. Read more
- India VIX
- NSE's volatility index: the volatility expected over the next 30 calendar days, computed from NIFTY option quotes. Read more
- Intrinsic value
- What an option would be worth if it expired now: the in-the-money amount, or zero. Read more
- Iron condor
- Selling an out-of-the-money put and call and buying further-out wings: a defined-risk position that profits if the index stays in a range. Read more
- IV crush
- The fall in implied volatility once a scheduled event has passed, which deflates premiums across strikes. Read more
- IV Percentile
- The share of the past year's trading days on which implied volatility was below today's level. Read more
- IV Rank
- Where today's implied volatility sits within the past year's range, from 0 at the low to 100 at the high. Read more
L
- Lot size
- The number of units in one option contract. One NIFTY lot is 65 units. Read more
M
- Margin
- The money a broker blocks to hold a position that carries open-ended risk, mainly sold options and futures. Bought options need only their premium.
- Max Pain
- The expiry price at which all open options would be worth the least in total, computed from open interest. Read more
- Moneyness
- Where a strike sits relative to the current price: in, at or out of the money. Read more
O
- Open interest (OI)
- The number of contracts at a strike that have been opened and not yet closed. Read more
- Option chain
- The table of every strike for one underlying and one expiry, with calls on one side and puts on the other. Read more
- Option writer
- The seller of an option, who collects the premium and takes on the obligation the buyer's right creates.
- Out of the money (OTM)
- A call whose strike is above the current price, or a put whose strike is below it: an option with no intrinsic value. Read more
P
- Payoff diagram
- A chart of a position's profit or loss at expiry across a range of underlying prices. Read more
- Put option (PE)
- A contract giving its buyer the right to sell the underlying at the strike price on the expiry date. Indian chains label puts PE. Read more
- Put-call ratio (PCR)
- Total put open interest divided by total call open interest for one expiry. Read more
R
- Rho
- The change in an option's premium for a one percentage point change in interest rates. Small on short-dated options. Read more
S
- Skew
- The pattern of implied volatility across strikes. On index options, out-of-the-money puts usually carry higher IV than calls. Read more
- Spread
- A position of two or more options on the same underlying, one bought and one sold, that caps risk, reward or both. Read more
- Straddle
- Buying (or selling) a call and a put at the same strike and expiry: a position on the size of a move rather than its direction. Read more
- Strangle
- Buying (or selling) an out-of-the-money call and an out-of-the-money put on the same expiry: a cheaper straddle that needs a bigger move. Read more
- Strike price
- The price at which an option's buyer may buy (a call) or sell (a put) the underlying. Read more
T
U
- Underlying
- The asset an option is written on, such as the NIFTY index or a listed stock. Read more
V
W
- Weekly expiry
- A contract that expires each week. On NSE only NIFTY has weekly options, expiring every Tuesday. Read more
Related guides
Educational content only: not investment advice. You are responsible for your own trading decisions.