Options Glossary

Butterfly Spread	A position that is created by taking a long position in a call with strike price X1, a long position in a call with strike price X3 and a short position in two calls with strike price X2 where X3 > X2 > X1 and X2 = 0.5(X1 + X2).
Calendar Spread	A position that is created by taking a long position in a call option that matures at one time and a short position in a similar call option that matures at a different time.
Call Option	An option to buy an asset at a certain price on a certain date some time in the future.
Delta	The rate of change of the price of a derivative with the price of the underlying asset.
Exercise Price	The price at which an option can be exercised (i.e. bought or sold).
Exotic Option	A non standard option
Fair Value	This is calculated as the level where the contract should trade taking into account the cost of carry.

Butterfly Spread A position that is created by taking a long position in a call with strike price X1, a long position in a call with strike price X3 and a short position in two calls with strike price X2 where X3 > X2 > X1 and X2 = 0.5(X1 + X2).
Calendar Spread A position that is created by taking a long position in a call option that matures at one time and a short position in a similar call option that matures at a different time.
Call Option An option to buy an asset at a certain price on a certain date some time in the future.
Delta The rate of change of the price of a derivative with the price of the underlying asset.
Exercise Price The price at which an option can be exercised (i.e. bought or sold).
Exotic Option A non standard option
Fair Value This is calculated as the level where the contract should trade taking into account the cost of carry.