Options Trading Glossary
A comprehensive glossary of options trading terms and concepts, specifically focused on crypto options trading and the metrics used in our dashboard.
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Greeks
Gamma Exposure (GEX)
The total gamma across all options positions, weighted by their open interest. Measures the sensitivity of option deltas to underlying price changes.
Delta
The rate of change of an option's price with respect to changes in the underlying asset's price. Ranges from 0 to 1 for calls, 0 to -1 for puts.
Gamma
The rate of change of delta with respect to changes in the underlying asset's price. Measures delta sensitivity.
Theta
The rate of change of an option's price with respect to time decay. Options lose value as expiration approaches.
Vega
The rate of change of an option's price with respect to changes in implied volatility.
Rho
The rate of change of an option's price with respect to changes in interest rates. Less relevant for crypto options.
Volatility
Option Skew
The difference in implied volatility between out-of-the-money puts and calls at the same strike distance from the current price.
Skew Delta 25
The difference in implied volatility between 25-delta puts and 25-delta calls. A standard measure for volatility surface analysis.
Implied Volatility (IV)
The market's expectation of future volatility implied by current option prices. Higher IV means higher option prices.
Volatility Surface
A three-dimensional representation showing implied volatility across different strikes and expirations.
Moneyness
At-The-Money (ATM)
An option where the strike price equals the current price of the underlying asset.
In-The-Money (ITM)
A call option with strike below current price, or put option with strike above current price. Has intrinsic value.
Out-Of-The-Money (OTM)
A call option with strike above current price, or put option with strike below current price. No intrinsic value.
Market Data
Open Interest
The total number of outstanding option contracts that have not been closed or exercised.
Volume
The number of option contracts traded during a specific time period.
Bid-Ask Spread
The difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask).
Contract Terms
Strike Price
The predetermined price at which an option can be exercised. The price at which the underlying asset can be bought (call) or sold (put).
Expiration Date
The last date on which an option can be exercised. After this date, the option becomes worthless.
Exercise
The act of buying (call) or selling (put) the underlying asset at the strike price before expiration.
Assignment
When an option seller is obligated to fulfill the terms of the option contract upon exercise by the buyer.
Pricing
Put-Call Parity
The relationship between put and call prices with the same strike and expiration, based on arbitrage principles.
Black-Scholes Model
A mathematical model for pricing European options, though less accurate for crypto due to high volatility.
Market Structure
Market Maker
A trader or firm that provides liquidity by continuously quoting bid and ask prices for options.
Risk Management
Hedging
The practice of taking offsetting positions to reduce risk exposure in a portfolio.
Delta Hedging
A hedging strategy that aims to maintain a delta-neutral position by adjusting the underlying asset position.
Trading Strategies
Gamma Scalping
A trading strategy that profits from gamma by frequently adjusting delta hedges as the underlying moves.
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