Options Trading Glossary
Plain-English definitions of the concepts that actually move options markets — dealer positioning, volatility, order flow, and income strategies. Every term links to the tool that shows it on your own ticker.
Dealer Positioning
Gamma Exposure (GEX)
The dollar amount of delta that options dealers must buy or sell for every 1% move in the underlying, aggregated across the options chain.
Delta Exposure (DEX)
The aggregate directional exposure dealers carry across the options chain, expressed in dollars of underlying equivalent.
Vanna Exposure (VEX)
How much dealer delta changes when implied volatility changes — the mechanism behind volatility-driven hedging flows.
Charm (Delta Decay)
The rate at which an option’s delta changes purely from the passage of time, driving hedge drift into expiration.
Gamma Squeeze
A self-reinforcing rally in which dealer hedging of short call positions forces buying that drives price into further call strikes.
Pin Risk
The tendency of an underlying to gravitate toward and stall at a heavily traded strike as expiration approaches.
Expiration
Volatility
Implied Volatility (IV)
The volatility figure that, put into an options pricing model, reproduces the contract’s market price — the market’s forecast of future movement.
IV Rank
Where current implied volatility sits between its lowest and highest readings over a trailing window, on a 0–100 scale.
IV Percentile
The share of days over a trailing window on which implied volatility closed below today’s reading.
Volatility Skew
The pattern of implied volatility varying across strikes at the same expiration, showing where the market pays up for protection.
Order Flow
Options Sweep
An aggressive order split across multiple exchanges to fill immediately, prioritising speed over price.
Golden Sweep
An unusually large, high-premium sweep that meets aggressive directional criteria — often read as an institutional bet rather than a hedge.
Block Trade
A single large options order, typically negotiated off the public order book to avoid moving the market.
Net Premium Drift
The running intraday total of bullish minus bearish options premium, measuring net positioning pressure rather than individual trades.
Income Strategies
Theta Decay
The erosion of an option’s extrinsic value as expiration approaches — the seller’s income and the buyer’s cost.
Covered Call
Selling a call against 100 shares you already own, collecting premium in exchange for capping upside at the strike.
Cash-Secured Put
Selling a put while holding enough cash to buy the shares if assigned — collecting premium to wait for a lower entry.
The Wheel Strategy
A systematic income cycle: sell cash-secured puts until assigned, then sell covered calls against the shares until they are called away.
Disclaimer: All content is for educational and informational purposes only. This is not financial advice. Options trading involves significant risk. Please consult with a financial advisor before making trading decisions.