A practical options glossary for traders.

Implied volatility, or the market's estimate of how much a stock may move over a given period.

Useful because higher IV often means richer premium, but also higher expected movement.

Where current IV sits relative to its range over a lookback period, usually 52 weeks.

Helps compare today's volatility to the stock's own history.

The percentage of days in the lookback window when IV was lower than today's level.

Useful for finding names that have spent more time at lower volatility.

The option Greek that estimates how much the option price may change for a $1 move in the stock.

Also used as a rough proxy for probability and directional exposure.

The rate of change in delta as the stock price moves.

Higher gamma means delta can change quickly, especially near expiration.

The option Greek that measures time decay.

For sellers, theta is usually the premium decay you want to collect.

The option Greek that measures sensitivity to changes in implied volatility.

Higher vega means the contract is more affected by IV changes.

The number of outstanding option contracts still open.

Higher open interest usually means a deeper, more active market.

How many contracts traded during the current session.

Helps confirm whether interest in a strike is building today.

The difference between the bid and ask price.

Narrow spreads usually mean better liquidity and lower slippage.

Days to expiration.

Shows how much time remains before the option expires.

A put sold while reserving enough cash to buy the shares if assigned.

Common income strategy for traders willing to own the stock.

A call sold against shares you already own.

Used to generate income from existing stock positions.

A workflow that often starts with cash-secured puts and may move to covered calls after assignment.

Popular among income traders who want a repeatable process.

When the option buyer exercises the contract and the seller must fulfill the obligation.

For short puts, assignment can mean buying the shares.

The premium received compared with the capital at risk or the strike value.

Useful for comparing income potential across candidates.

An estimate of how likely the trade is to finish profitable.

Helpful, but it should be paired with liquidity and risk checks.