Options terminology

I’ve been writing about  my experience with options trading for a while now and feel like I often have to explain options-related terminology within my articles so I’ve decided to just post a quick glossary of terms that I’ll be able to refer to in future articles.  This is just a basic list, but ought to cover most of the phrases I’ll use in future articles.

Options Trading Jargon:

• Bid - The highest offered price at a specified time.
• Black-Scholes Model - A theoretical method of pricing using strike price, market price, interest rates, expiration date and other factors.
• Butterfly Spread - A trading strategy consisting of the purchase of two identical options, together with the sale of one option with a higher strike price, and one option with an lower strike price.  (All options are of the same type, have the same underlying asset and the same expiration date.)
• Calendar Spread - A trading strategy consisting of one long and one short option of the same type with the same exercise price, but which expire in different months. 
• Call - An options contract conferring the right to buy an underlying asset, such as 100 shares of stock, at a pre-set price, by a specified date.
• Condor - A trading strategy consisting of the sale (or purchase) of two options with consecutive exercise prices, together with the sale (or purchase) of one option with a lower exercise price and one option with a higher exercise price.
• Covered Call - A trading strategy which consists of holding a long position in an asset and selling call options on that same asset.
• Delta - A ratio comparing the change in the price of an option to that of a change in the underlying asset.
• Exercise Price - Same as strike price
• Hedge - A technique of reducing risk by taking positions which tend to move in opposite directions.
• Historic Volatility - (See Volatility) Calculated by using the standard deviation of underlying asset price changes from close to close trading for the prior 21 days.
• Holder - Same as writer; the buyer of an option. 
• In-the-Money - A (call/put) option is in-the-money if the strike price is (less/more) than the market price of the underlying security.
• Intrinsic Value - The difference between the underlying asset’s price and the strike price. (For both puts and calls, if the difference is negative, the value is given as zero.)
• Naked Option - An option written (sold) without a position in the underlying asset.
• Option - A contract to buy (call) or sell (put) an underlying asset at a pre-set price by a specific date (American style) or on a specific date (European style).
• Open Interest - The total number of options contracts not closed or delivered on a given day.
• Out-of-the-Money - An option whose exercise price has no intrinsic value.
• Premium - The price an option buyer pays to an option seller.
• Put - An option contract granting the right to sell an asset at a pre-set price within a specified time.
• Straddle - A trading strategy consisting of a long (short) call and a long (short) put, in which both options have the same strike price and expiration date.
• Strangle - A trading strategy consisting of a long (short) call and a long (short) put in which both options have the same expiration date, but different strike prices.
• Strike Price - The price at which an underlying asset must be bought (call) or sold (put), if an option is exercised.
• Time Value - The amount by which the current market price of a option exceeds its intrinsic value.
• Volatility - A measurement of degree of change in price over a specified period of time.
• Writer - The seller of either a call or put option.