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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.