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Advance-Decline Line

A cumulative running total of daily net advances minus declines, used to track market participation trends over time.

Advance-Decline Ratio

The ratio of the number of stocks rising to the number of stocks falling on the exchange during a given session.

American Option

An option contract that can be exercised at any time on or before its expiry date.

Assignment

The obligation placed on an option seller to fulfil the contract when the buyer chooses to exercise it.

At the Money (ATM)

An option whose strike price is equal to, or very close to, the current market price of the underlying.

B

Backtesting

The process of testing a trading strategy's rules against historical market data to see how it would have performed before risking real...

Backwardation

A market condition where futures prices are lower than the expected spot price of the underlying asset.

Bank Nifty PCR

The Put-Call Ratio computed specifically for Bank Nifty options, reflecting sentiment in the banking sector rather than the broader market.

Basket Order

An order type that lets a trader submit multiple option or futures legs of a strategy together in a single click.

Bear Put Spread

A strategy that buys a higher-strike put and sells a lower-strike put to profit from a moderate fall in the underlying.

Bhav Copy

The official end-of-day report published by NSE listing the closing price, volume, and open interest for every traded security and contract.

Bid-Ask Spread

The gap between the highest price a buyer is willing to pay and the lowest price a seller will accept for an...

Breadth Divergence

A mismatch between the direction of the index and the direction of broader participation, often signaling a fragile or unsustainable move.

Breakeven Point

The underlying price at which an options strategy's total profit or loss equals zero after accounting for premium paid or received.

Brokerage

The fee a broker charges for executing a buy or sell order, one of several costs that separate a trade's raw profit...

Bull Call Spread

A strategy that buys a lower-strike call and sells a higher-strike call to profit from a moderate rise in the underlying.

C

Call Option

A contract that gives the buyer the right, but not the obligation, to buy an underlying asset at a fixed price before...

Cash Settlement

A settlement method where the difference between the contract price and market price is paid in cash rather than delivering the underlying...

Change in OI (COI)

The net change in open interest for a contract over a period, showing whether positions are being added or unwound, not just...

Client Positioning

The aggregate open positions held by retail and non-institutional traders in a market segment, as reported separately by the exchange.

Contango

A market condition where futures prices are higher than the expected spot price of the underlying asset.

Covered Call

A strategy where a trader holding shares sells a call option against them to generate additional income.

Cumulative Volume

The running total of contracts or shares traded from the start of the session onward, used to track how participation builds through...

D

Daily Loss Limit

A predetermined maximum loss a trader allows themselves to take in a single day, after which they stop trading regardless of setups...

Delta

A Greek that measures how much an option's price is expected to change for every ₹1 move in the underlying.

Delta Hedging

A risk-management technique where a trader offsets an option position's directional exposure by trading the underlying asset in proportion to its delta.

DII (Domestic Institutional Investor)

An India-based institution such as a mutual fund, insurer, or bank that invests in domestic markets and often offsets foreign investor flows.

Distribution (Volume Pattern)

A volume pattern where heavy trading occurs at elevated price levels without further upside follow-through, often read as large holders selling into...

E

European Option

An option contract that can only be exercised on its expiry date, not before.

Exercise

The act of an option buyer using their right to buy or sell the underlying asset at the strike price.

Expired Contract Data

Historical price, volume, and open-interest records for futures and options contracts after their expiry, preserved for analysis and strategy testing.

Expiry Date

The date on which an options or futures contract stops trading and is settled.

F

F&O Ban

A regulatory restriction placed on a stock's derivatives contracts when open interest crosses a defined threshold of market-wide position limits.

FII (Foreign Institutional Investor)

An overseas institution such as a fund or bank that invests in Indian markets, whose large flows heavily influence index direction.

FOMO Trading

Entering a trade impulsively because a stock or index is moving fast and the trader fears missing further gains, usually without a...

Futures Contract

A standardized agreement to buy or sell an underlying asset at a fixed price on a specified future date.

G

Gamma

A Greek that measures the rate of change of an option's delta as the underlying price moves.

Gamma Risk

The danger that an option position's delta changes rapidly near expiry or at the money, making hedges suddenly inaccurate and costly to...

Gap Down

A stock or index opening below its previous closing price with no trades occurring in between, usually triggered by negative overnight news.

Gap Up

A situation where a stock or index opens the trading session noticeably higher than its previous close, leaving a visible gap on...

Gross P&L vs Net P&L

Gross P&L is raw profit or loss from price movement alone, while net P&L subtracts all trading costs to show what actually...

GST on Brokerage

Goods and Services Tax charged on the brokerage fee itself and on certain exchange charges, adding to the total cost of executing...

H

Hedging

A risk-management strategy that uses derivatives to offset potential losses in an existing position.

Heikin Ashi

A Japanese charting technique that plots smoothed candles from averaged open-high-low-close values to make trend direction easier to read.

Historical Volatility

A statistical measure of how much an underlying asset's price has actually fluctuated over a past period.

I

Implied Volatility

The market's forecast of how much an underlying asset's price is likely to fluctuate, derived from an option's premium.

In the Money (ITM)

An option that has intrinsic value because exercising it would be profitable at the current market price.

Index Option

An option contract where the underlying asset is a stock market index rather than an individual stock.

India VIX

An index that measures the market's expectation of near-term volatility in the Nifty 50, based on option prices.

Intrinsic Value

The portion of an option's premium that reflects real, exercisable value at the current market price.

IOI (Intraday OI)

The running change in open interest for a contract measured within a single trading session, updated continuously as positions are added or...

Iron Condor

A four-leg options strategy that combines a bear call spread and a bull put spread to profit from low volatility.

L

Leg Risk

The danger that one leg of a multi-leg options strategy fills while another leg is delayed or fails, leaving an unintended exposure.

Long Buildup

A simultaneous rise in price and open interest in a futures or options contract, indicating traders are creating fresh long positions.

Long Unwinding

A decline in both price and open interest, showing that existing long positions are being closed rather than new shorts being created.

Lot Size

The fixed number of underlying units that make up one standard futures or options contract.

M

Margin

The minimum amount of funds a trader must deposit with a broker to open and maintain a leveraged position.

Mark to Market

The daily process of revaluing open futures positions to reflect the day's closing price, settling gains and losses.

Market Breadth

A measure of how many stocks are advancing versus declining across the market, showing whether an index move is broad-based or narrow.

Market Chart Replay

A tool that replays historical price action candle-by-candle at controllable speed, letting traders practice reading charts as if trading live.

Market Heatmap

A color-coded visual grid showing which stocks or sectors are gaining or losing, and by how much, at a glance.

Market Screener (FNO Screener)

A tool that filters the F&O universe by criteria like open interest change, volume, or price action to surface stocks and indices...

Max Pain

The strike price at which the largest number of option buyers would lose money at expiry, calculated from total option writer payout...

Max Pain Gravity Effect

The observed tendency of an underlying's price to drift toward its calculated max pain strike as expiry approaches, especially in the final...

Multistrike Open Interest

A view showing open interest across multiple strike prices of an option chain at once, used to spot broad positioning trends.

N

Naked Option

An option position sold without an offsetting position in the underlying asset, exposing the seller to potentially large losses.

Net Greeks

The combined Delta, Theta, Gamma, and Vega exposure of every open position in a portfolio, summarising its overall risk sensitivity.

NSE Exchange Transaction Charges

A fee the National Stock Exchange charges on every executed trade to fund exchange operations, passed through to traders on their contract...

O

OI Confluence

The overlap of high open interest across multiple strikes or expiries, used to identify stronger, more reliable support and resistance zones.

OI Gainers

A screener view ranking F&O contracts by the largest increase in open interest over a chosen period, highlighting where new positions are...

OI Losers

A screener view ranking F&O contracts by the largest decrease in open interest, highlighting where existing positions are being closed out fastest.

OI Wall

A strike price where open interest is unusually concentrated, often acting as a psychological support or resistance level for the underlying.

OI-based PCR

The Put-Call Ratio calculated from outstanding open interest in puts versus calls, reflecting positions built up over time rather than a single...

Open Interest

The total number of outstanding option or futures contracts that have not yet been settled or closed.

Option Chain

A table listing all available call and put options for a security, organized by strike price and expiry.

Option Chain Replay

A playback tool that reconstructs how an entire option chain's prices, open interest, and Greeks changed through a past trading session.

Option Greeks

A set of risk measures - delta, gamma, theta, vega, and rho - used to describe how an option's price reacts to...

Option Pinning

The tendency for an underlying's price to settle very close to a strike carrying unusually heavy open interest at expiry, reinforced by...

OTM PCR

A Put-Call Ratio calculated using only out-of-the-money strikes, isolating pure directional and hedging bets from at-the-money and in-the-money activity.

Out of the Money (OTM)

An option that has no intrinsic value because exercising it would not be profitable at the current market price.

P

Participant-wise Open Interest

Exchange-published data breaking down total open interest by trader category — FII, DII, Pro, and Client — for a given segment.

Payoff Diagram

A chart plotting an option strategy's profit or loss against underlying price at expiry, showing breakeven and maximum risk.

Physical Settlement

A settlement method where an exercised option results in actual delivery of the underlying shares rather than a cash payment.

Position Sizing

The process of deciding how much capital or how many lots to risk on a single trade, based on account size and...

Premium

The price a buyer pays to purchase an option contract.

Pro (Proprietary Desk) Positioning

The trading positions held by brokerage and institutional proprietary desks trading their own capital rather than client money.

Protective Put

A strategy where a stockholder buys a put option to insure their position against a price decline.

Put Option

A contract that gives the buyer the right, but not the obligation, to sell an underlying asset at a fixed price before...

Put-Call Ratio

A sentiment indicator calculated by dividing put trading volume or open interest by call trading volume or open interest.

R

Renko

A chart type built from fixed-size price bricks that ignores time entirely, plotting a new brick only when price moves by a...

Revenge Trading

An emotional pattern where a trader takes impulsive, oversized trades right after a loss to quickly win back money, usually deepening the...

Rho

A Greek that measures an option's price sensitivity to changes in interest rates.

Risk-Reward Ratio (R:R)

A comparison of a trade's potential loss to its potential gain, expressed as a ratio such as 1:2, used to plan trades...

Rollover

The practice of closing a position nearing expiry and opening a similar position in a later expiry contract.

S

Scalping

An intraday trading style of taking many rapid, small-profit trades within seconds to minutes to capture tiny price movements.

SEBI Regulatory Fees

A small fee charged on traded turnover that funds the Securities and Exchange Board of India's oversight of the securities markets.

Sector Rotation

The shifting of investor capital and momentum from one market sector to another as economic conditions or sentiment change.

Short Buildup

A fall in price accompanied by a rise in open interest, showing that traders are opening fresh short positions rather than closing...

Short Covering

A rise in price alongside a fall in open interest, meaning short sellers are buying back and closing their positions, not new...

Short Selling

Selling a security you do not currently own, with the intention of buying it back later at a lower price.

Stock Option

An option contract where the underlying asset is shares of an individual listed company.

Stop-Loss

A pre-set order that automatically closes a position once the price reaches a specified level, limiting potential losses.

Straddle

An options strategy involving the simultaneous purchase (or sale) of a call and put at the same strike price and expiry.

Strangle

An options strategy involving the simultaneous purchase (or sale) of an out-of-the-money call and put with the same expiry.

Strike Price

The fixed price at which an option can be exercised to buy or sell the underlying asset.

Strikewise Open Interest

The open interest recorded at one individual strike price for calls and puts, used to gauge sentiment at that specific level.

STT (Securities Transaction Tax)

A government-levied tax charged on the value of securities transactions executed on Indian stock exchanges, including F&O trades.

Supertrend

A trend-following indicator built on average true range that plots a dynamic line to signal buy or sell zones on a chart.

Support and Resistance

Price levels where an index or stock has repeatedly reversed or stalled, treated by traders as zones of likely buying or selling...

T

Theta

A Greek that measures how much value an option loses each day purely due to the passage of time.

Theta Decay Curve

The non-linear path by which an option's time value erodes as expiry approaches, accelerating sharply in the final days before expiry.

Theta-Positive Strategy

An options strategy structured so time decay works in the trader's favour, earning profit simply as expiry approaches.

Time Value

The portion of an option's premium above its intrinsic value, reflecting the possibility of further favorable price movement before expiry.

Trailing Stop-Loss

A stop-loss order that automatically moves with favourable price action to lock in profit while still limiting downside risk.

U

Underlying Asset

The stock, index, or commodity on which a derivative contract's value is based.

W

Win Rate

The percentage of a trader's total trades that close profitably over a given period, one input among several used to judge strategy...

Master the language of options trading,one term at a time.

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