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Options Trading Glossary

Quick definitions for the terms you'll see across Stolo's charts, terminals, and this guide.

Core Terms​

  • Call Option (CE): A contract giving the buyer the right (not obligation) to buy the underlying at a fixed strike price before expiry.
  • Put Option (PE): A contract giving the buyer the right (not obligation) to sell the underlying at a fixed strike price before expiry.
  • Strike Price: The fixed price at which an option can be exercised.
  • Premium: The price paid to buy an option.
  • Expiry: The date an options contract stops trading and is settled.
  • Lot Size: The fixed number of units per contract for a given instrument; you trade in whole lots, not individual shares.
  • ATM (At The Money): A strike price at or very close to the current price of the underlying.
  • ITM (In The Money): A strike that already has intrinsic value, for a call, a strike below the current price; for a put, a strike above it.
  • OTM (Out of The Money): A strike with no intrinsic value yet, for a call, a strike above the current price; for a put, a strike below it.

Open Interest & Sentiment​

  • Open Interest (OI): The total number of outstanding (not yet closed) option or futures contracts at a strike or expiry. See Open Interest analysis.
  • PCR (Put-Call Ratio): Put OI or volume divided by Call OI or volume; used to gauge whether sentiment is skewing bearish (higher PCR) or bullish (lower PCR). See PCR OI Trend.
  • Max Pain: The strike price at which option writers (sellers) collectively lose the least at expiry, often referenced as a magnet price into expiry. See Max Pain.
  • OI Build-up: A rise in Open Interest, generally read alongside price direction to classify a move as Long Build-up, Short Build-up, Long Unwinding, or Short Covering.

Volatility & Greeks​

  • Implied Volatility (IV): The market's forward-looking estimate of how much an underlying's price will move, derived from option prices rather than historical data.
  • Theta: The rate at which an option's premium decays per day, all else equal, see Premium Decay.
  • Delta: How much an option's premium is expected to move for a ₹1 move in the underlying.
  • Gamma: The rate of change of Delta itself as the underlying moves.
  • Vega: How much an option's premium changes for a 1-point change in implied volatility.

Trading Mechanics​

  • Straddle: Buying (or selling) a call and put at the same strike and expiry, used to trade or hedge volatility. See Straddle Chain.
  • Strangle: Similar to a straddle, but using an OTM call and an OTM put instead of the same strike.
  • MIS (Margin Intraday Square-off): An order type for intraday-only positions that are auto-squared-off before market close.
  • NRML (Normal): An order type for positions you intend to carry overnight, subject to margin requirements.
  • Stoploss (SL): An opposite-side order that closes a position once it moves against you by a set amount, to cap loss. See Stoploss Preferences.
  • Target: An opposite-side order that closes a position once it reaches a set profit level. See Target Preferences.

Have a term you think is missing? Let us know and we'll add it.

Frequently asked questions​

What is open interest in simple terms?
Open interest is the number of option or futures contracts that are currently open, meaning not yet closed or expired. It measures how much real positioning sits in a contract. Rising OI means new positions are being opened; falling OI means positions are being closed.
What does PCR mean?
PCR is the put-call ratio: total put open interest divided by total call open interest. Above 1 means puts dominate, often read as bullish positioning or, at extremes, a contrarian top signal. Below 1 means calls dominate.
What is max pain?
Max pain is the strike price at which the total value of all open options is lowest at expiry, so option writers lose the least. Price often drifts toward it on quiet expiries.
What do ATM, ITM and OTM mean?
At the money is a strike at or very near the current price. In the money is a strike that already has intrinsic value (a call below price, a put above it). Out of the money is a strike with no intrinsic value, only time value.
What are the option Greeks?
Delta is how much the option price moves per point of the underlying. Gamma is how fast delta changes. Theta is the daily loss to time decay. Vega is the sensitivity to a change in implied volatility.
What is implied volatility?
Implied volatility is the expected move the option market is pricing in, backed out from option prices. Higher IV means more expensive options. It is forward-looking and says nothing about direction.
What is a straddle and a strangle?
A straddle is a call and a put at the same strike; a strangle uses two different out-of-the-money strikes. Both profit from a large move in either direction if bought, or from price staying in a range if sold.
What is the basis in futures?
The basis is the difference between the futures price and the spot price. A premium (future above spot) is normal and reflects the cost of carry; a discount signals selling pressure or hedging demand.