Login / Signup
Options Glossary

Options
Glossary

Every options term that matters, explained in plain English with a quick example. Bookmark it and never be tripped up by jargon again.

Options Basics

Assignment

The obligation handed to an option writer when the holder exercises.

Definition →

Bid-Ask Spread

The gap between buy and sell prices — a hidden cost on every trade and a quick read on liquidity.

Definition →

Call Option

A contract that gives you the right to buy the underlying at a set price — your bullish bet, with loss capped at the premium.

Definition →

Exercise

Invoking the right an option gives you — to settle at the strike price.

Definition →

Lot Size

Options trade in fixed bundles, not single units — that bundle is the lot size.

Definition →

Naked Option

A sold option with no hedge behind it — small fixed reward against large, open-ended risk.

Definition →

Option Buyer

The holder who pays a premium for the right to exercise — loss capped at the premium, upside open.

Definition →

Option Chain

A single table of every call and put across strikes — the trader's primary dashboard.

Definition →

Option Writer

The seller who pockets the premium up front and takes on the obligation — limited reward, large risk, margin required.

Definition →

Premium

The price of an option — what you pay to buy it, or collect to sell it.

Definition →

Put Option

A contract that gives you the right to sell the underlying at a set price — your bearish bet, or insurance for a long position.

Definition →

Strike Price

The fixed price at which an option can be exercised — the anchor every payoff is measured from.

Definition →
Moneyness & Value

At The Money

The strike sitting right at the current spot — the pivot where time value, gamma and uncertainty all peak.

Definition →

Break Even Point

The underlying price at which an option trade neither makes nor loses money.

Definition →

Extrinsic Value

The time-and-volatility part of an option premium that melts away by expiry.

Definition →

In The Money

An option that already has real, exercisable worth — its strike sits on the favourable side of the current spot price.

Definition →

Intrinsic Value

The "real" in-the-money worth baked into an option's price — the part that isn't just time and hope.

Definition →

Moneyness

Where an option's strike sits relative to the current price of the underlying.

Definition →

Out Of The Money

An option with no intrinsic value yet — cheap, all time value, and dependent on the underlying moving in your favour.

Definition →

Time Value

The premium you pay for time and uncertainty — and the part that melts away as expiry approaches.

Definition →
Open Interest & Flow

Change in OI

The session-by-session shift in outstanding contracts — pair it with price direction and it tells you whether the market's next move is backed by fresh conviction or just covering.

Definition →

Long Buildup

Price climbing on expanding open interest — the clearest footprint of fresh longs committing to an uptrend.

Definition →

Long Unwinding

Bulls exiting their positions — price drops alongside open interest, signalling profit-booking rather than a fresh bear attack.

Definition →

Max Pain

The strike price where option buyers collectively suffer the greatest loss at expiry — a key gravitational level watched on every NSE expiry day.

Definition →

OI Buildup

When rising price meets rising open interest, fresh bullish conviction is entering the market.

Definition →

Open Interest

The total count of F&O contracts that exist right now — a real-time measure of how much money and conviction is committed to a particular strike or series.

Definition →

Put-Call Ratio (PCR)

A single number that captures the balance between Put and Call activity — one of the most watched sentiment gauges in Indian options markets.

Definition →

Short Buildup

Price falling while open interest rises — fresh shorts pressing a downtrend with real conviction.

Definition →

Short Covering

A price rise driven not by fresh buyers but by shorts exiting — intense, often brief, and structurally different from genuine bullish flow.

Definition →
Option Greeks

Charm (Delta Decay)

How your delta drifts on its own as the clock ticks toward expiry.

Definition →

Color (Greek)

Gamma decay — the third-order Greek measuring how your gamma estimate drifts overnight from time passing alone, before the market even opens.

Definition →

Delta Hedging

Cancelling an option's directional risk by trading the underlying against it.

Definition →

Delta Neutral

A position whose net delta is about zero, so direction barely moves its value.

Definition →

Dual Delta

The option's sensitivity to its own strike price — and the cleanest single-number read on the risk-neutral probability of finishing in the money.

Definition →

Elasticity

The proportional leverage inside every option — how large a percentage gain or loss the contract delivers for each percentage point the underlying moves.

Definition →

Gamma (Γ)

How fast delta itself changes — the Greek that makes options accelerate.

Definition →

Lambda

The true leverage multiplier of an options position — how many percent your option moves for every 1% move in the underlying.

Definition →

Position Greeks

The aggregated risk dashboard for a full options book — net delta, gamma, vega, and theta across every leg, weighted by quantity and lot size.

Definition →

Rho (ρ)

The interest-rate Greek — usually the quietest one, but worth knowing.

Definition →

Second-Order Greeks

The curvature layer of options risk — measuring how delta, vega, and theta themselves change as markets move, volatility shifts, and time passes.

Definition →

Speed (Greek)

The third-order Greek that tells you how fast your gamma is changing as the market moves — critical for anyone running a large gamma-hedged book near expiry.

Definition →

Theta (Θ)

The clock ticking against option buyers — how much value time decay strips out each day.

Definition →

Theta Decay (Time Decay)

The clock working against the buyer and for the seller, one day at a time.

Definition →

Vanna

The cross-Greek that links your delta to volatility and your vega to price.

Definition →

Vega (V)

How much volatility moves your option — the Greek behind IV crush and event trades.

Definition →

Vomma (Volga)

The convexity Greek that tells you how fast your vega grows as volatility rises.

Definition →

Zomma

How much your gamma exposure changes when implied volatility moves — the risk-within-the-risk that surprises options books during IV events.

Definition →
Volatility

ATM IV

The implied volatility of the at-the-money strike — the market's purest single-number read on expected price swings.

Definition →

Forward Volatility

The volatility the options market prices in for a specific future window — extracted by comparing two expiry dates on the same underlying.

Definition →

Historical Volatility

How much the underlying has actually moved — the realised, backward-looking measure of risk.

Definition →

Implied Volatility

The market's forward-looking estimate of how much price will move — priced into every option.

Definition →

Implied vs Realized Volatility

The gap between what the market expects and what actually happens — and why it is the edge that most option sellers are really collecting.

Definition →

India VIX

NSE's real-time fear gauge — the market's consensus on how wildly Nifty will swing over the next 30 days.

Definition →

IV Crush

When the air goes out of option premiums the moment a big event is over.

Definition →

IV Percentile

A single number that tells you whether options are cheap or expensive relative to their own history.

Definition →

IV Rank

Where today's implied volatility sits between its yearly high and low, from 0 to 100.

Definition →

Realized Volatility

How much an asset actually moved over a past window — the backward-looking twin of IV.

Definition →

Variance

The squared foundation of all volatility math — why the option market lives in variance space even when it quotes in vol.

Definition →

Vega Exposure

The total rupee sensitivity of an options position to a one-point change in implied volatility — the aggregate volatility bet embedded in your book.

Definition →

Volatility Cone

A multi-window chart that shows whether implied volatility is genuinely elevated or cheap relative to its own historical distribution.

Definition →

Volatility Risk Premium

The structural tendency for implied volatility to overstate actual subsequent market moves — the core reason options selling has a long-run statistical edge.

Definition →

Volatility Skew

The lopsided way the market prices implied volatility higher on one side of the strike range.

Definition →

Volatility Smile

The U-shaped curve that shows the market charging more implied volatility for far-out strikes.

Definition →

Volatility Surface

A 3D picture of implied volatility across every strike and expiry at once.

Definition →

Volatility Term Structure

How implied volatility changes from this week's expiry to the far months.

Definition →
Pricing Models

Binomial Option Pricing Model

Valuing an option by mapping out every up-and-down move on a price tree, one step at a time.

Definition →

Black-Scholes Model

The classic formula that turns five inputs into a fair option price — and powers the Greeks.

Definition →

Put-Call Parity

The arbitrage law that locks call and put prices together at the same strike.

Definition →

Theoretical Price

What a pricing model says an option should be worth, versus what it trades for.

Definition →
Option Strategies

Adjustment

Modifying a live option position mid-trade to manage delta, reduce risk, or shift the profit zone as the market moves.

Definition →

Assignment Risk

The risk that a short option seller is assigned and obligated to buy or deliver shares — critical for stock options on NSE under physical settlement.

Definition →

Bear Put Spread

A defined-risk bet on a moderate fall: buy a higher put, sell a lower one.

Definition →

Bull Call Spread

A defined-risk bet on a moderate rise: buy a lower call, sell a higher one.

Definition →

Butterfly Spread

A three-strike, low-cost, defined-risk bet that the market pins near a single price by expiry.

Definition →

Calendar Spread

Same strike, two expiries — a structure that earns from faster decay in the near month.

Definition →

Covered Call

Sell a call against stock you already own to earn extra premium income.

Definition →

Defined Risk

A strategy structure where the maximum possible loss is fixed and known the moment you enter the trade.

Definition →

Leg

Each individual contract inside a multi-part strategy is called a leg — the building block of every spread.

Definition →

Long Call

The simplest bullish bet — unlimited upside, with loss capped at the premium.

Definition →

Margin Benefit

The capital saved when offsetting F&O legs are recognised by SPAN as a combined, lower-risk position.

Definition →

Maximum Loss

The worst-case outcome an options strategy can produce at expiry — capped and known in advance for defined-risk trades, open-ended for naked short positions.

Definition →

Maximum Profit

The theoretical ceiling on what an options strategy can earn at expiry — a number that is fixed at trade entry and determined by structure, not by prediction.

Definition →

Multi-Leg Strategy

Combining two or more option contracts to engineer a precise risk-reward profile that a single option cannot achieve.

Definition →

Payoff Diagram

A chart that maps every possible expiry price of an underlying to the net profit or loss of an options strategy — the essential blueprint before entering any trade.

Definition →

Protective Put

Buy a put on stock you own to insure against a sharp price decline.

Definition →

Risk-Reward Ratio

The single number that tells you whether a trade is worth taking before you place it.

Definition →

Rolling

Closing an existing option leg and reopening it at a new strike, a new expiry, or both — the most common mid-trade adjustment on NSE.

Definition →

Short Put

Sell a put, pocket the premium — but agree to buy if the market falls.

Definition →

Straddle

A call and a put on the same strike — a bet on how much the market moves, not which way.

Definition →

Strangle

An OTM call and an OTM put — a lower-cost cousin of the straddle that needs a bigger move to pay off.

Definition →

Synthetic Position

Mixing options and the underlying to copy another instrument's payoff — same shape, different building blocks.

Definition →

Undefined Risk

A position where losses have no fixed ceiling — the market can move against you by any amount.

Definition →
Futures & Margin

Backwardation

When the futures price sits below the spot price — the inverse of the usual market shape.

Definition →

Basis

The gap between the futures price and the spot price — and how it collapses to zero by expiry.

Definition →

Contango

When the futures price sits above the spot price — the normal shape of most markets.

Definition →

Cost of Carry

The net cost of holding the underlying until expiry — the engine behind the futures price.

Definition →

Delivery Margin

Extra collateral NSE blocks on stock F&O positions in the final expiry week to guarantee physical settlement — a mandatory feature of India's stock derivatives since 2019.

Definition →

Exposure Margin

The extra buffer NSE charges on top of SPAN margin to cover sudden, outsized market moves.

Definition →

Futures Contract

A binding deal to buy or sell later at a price you lock in today.

Definition →

Initial Margin

The upfront capital you must deposit before the exchange lets you open a futures or short option position.

Definition →

Maintenance Margin

The minimum balance you must keep in your account to keep an open position alive without a top-up demand.

Definition →

Margin

The capital your broker blocks to let you hold a position — and why sellers need far more of it than buyers.

Definition →

Margin Call

Your broker's demand to add funds when losses push your account below the margin it needs to hold your position.

Definition →

Mark To Market

The daily revaluation of open futures positions that credits or debits your profit and loss every single trading day.

Definition →

Peak Margin

SEBI's framework that captures the highest margin a client uses at any point in the trading day, closing the loophole of unlimited broker-granted intraday leverage.

Definition →

Pledge Margin

Collateral credit generated by pledging approved stocks or mutual funds from your demat account — you keep the investment, unlock margin for F&O, and pay a haircut for the privilege.

Definition →

Rollover

Closing an expiring futures position and reopening it in the next contract month.

Definition →

SPAN Margin

The scenario-based core component of initial margin, set by NSE's risk engine to cover the worst plausible single-day loss on your F&O book.

Definition →

Stock Futures

A contract to buy or sell one specific stock at a fixed price on a future expiry date.

Definition →
Risk & Money Management

Beta

A measure of how sensitively a stock or portfolio moves relative to a benchmark index like Nifty 50.

Definition →

Hedge Ratio

The precise number of derivative contracts required to neutralise a position's sensitivity to market moves.

Definition →

Portfolio Margin

A risk-based margin framework that nets exposure across all your F&O positions so genuinely hedged books attract lower combined capital requirements.

Definition →

Value at Risk (VaR)

A statistical estimate of the worst expected loss over a defined horizon at a chosen confidence level.

Definition →
Market Microstructure

Ask Price

The lowest price a seller will accept — the price you pay when you buy an option at market.

Definition →

Bid Price

The highest price a buyer will pay right now — what you receive when you sell an option at market.

Definition →

Circuit Limit

A SEBI-mandated price ceiling and floor that automatically halts trading when a stock or index moves too far, too fast.

Definition →

Freeze Quantity

The maximum number of lots NSE allows in a single F&O order — a hard cap that forces large traders to slice their execution.

Definition →

Impact Cost

The hidden slippage a large order pays as it walks the order book — a real measure of what liquidity actually costs you.

Definition →

Liquidity

How easily you can enter or exit a position without the act of trading itself moving the price against you.

Definition →

Lower Circuit

The price floor beyond which a stock cannot fall in a single session — a mechanism that can trap long holders when panic selling peaks.

Definition →

Market Depth

The full stack of pending buy and sell orders at every price level — the X-ray of supply and demand behind the quoted price.

Definition →

Open Interest vs Volume

Volume measures activity; open interest measures commitment — reading both together is essential for interpreting NSE F&O price moves.

Definition →

Order Book

The live, ranked ledger of every pending buy and sell order — the engine that determines where trades execute and at what price.

Definition →

Slippage

The gap between the price you intended to trade at and the price you actually got — a silent cost that compounds across every trade.

Definition →

Strike Interval

The fixed gap between consecutive option strike prices — a SEBI-governed design choice that shapes liquidity, spread width, and hedging precision across NSE's F&O universe.

Definition →

Tick Size

The smallest price step an F&O contract can move — the atomic unit of price change that defines your minimum P&L increment per lot.

Definition →

Upper Circuit

The hardest price ceiling a stock can hit in a single session — beyond which trading freezes and sellers become scarce.

Definition →

VWAP

The session's volume-weighted average price — the most widely watched intraday benchmark for institutions and algo desks on NSE.

Definition →
Order Types & Execution

Bracket Order

One click that fires three legs simultaneously — entry, target, and stop-loss — bracketing the trade so the system manages exits even when you step away.

Definition →

Cover Order

An intraday entry with a non-negotiable stop-loss baked in — the exchange-mandated stop defines your worst-case loss and can unlock lower margin from your broker.

Definition →

GTT Order

A persistent conditional order that monitors your price trigger for up to a year — set it once, let the broker fire it when the market comes to you.

Definition →

Limit Order

An instruction to buy or sell only at your specified price or better — the default choice for options traders who prioritise cost over certainty of fill.

Definition →

Market Order

The fastest way to get filled — a market order executes at whatever the best available price is right now, with no price guarantee and real slippage risk in thinly traded options.

Definition →

Stop-Limit Order

A two-price order that arms a limit order the moment the market touches your trigger — price control preserved, but execution is never guaranteed.

Definition →

Stop-Loss Order

An automatic exit trigger that fires when price crosses a pre-set level — the most widely used risk-control tool for retail F&O traders on NSE.

Definition →
Index & Underlying

Bank Nifty

NSE's concentrated banking-sector index — faster-moving and higher-premium than Nifty, and the preferred arena for intraday options traders seeking large directional moves.

Definition →

Bankex

BSE's banking sector index and the Friday-expiry weekly options contract — a cash-settled alternative to Bank Nifty for banking sector derivatives.

Definition →

Fin Nifty

NSE's financial services sector benchmark — the underlying for India's Tuesday-expiry weekly options contract spanning banks, NBFCs, and insurers.

Definition →

Midcap Nifty

NSE's 50-stock midcap benchmark with Monday-expiry weekly options — offering exposure to India's high-growth mid-tier companies via a single liquid derivative.

Definition →

Nifty 50

India's benchmark large-cap index and the world's most actively traded index options contract — the heartbeat of NSE's F&O ecosystem.

Definition →

Notional Value

The true economic size of a derivatives contract — spot price multiplied by lot size — which dwarfs the margin you actually deposit.

Definition →

Sensex

India's oldest equity benchmark — the BSE's 30-stock barometer and the underlying for BSE's Friday-expiry weekly options contract.

Definition →

Spot Price

The live, right-now price of an asset in the cash market — the anchor from which every futures and options contract derives its value.

Definition →

Underlying

The index, stock, or commodity whose price behaviour drives every tick of a futures or options contract written on it.

Definition →
Indian Market & Regulation

Commodities Transaction Tax (CTT)

India's transaction tax on non-agricultural commodity futures and options — the MCX equivalent of STT, levied on metals and energy derivatives at source.

Definition →

Do Not Exercise (DNE)

An expiry-day instruction to voluntarily waive automatic exercise of an in-the-money option — a critical tool for managing disproportionate STT charges in Indian equity options.

Definition →

MWPL

Market-Wide Position Limit — SEBI's aggregate OI ceiling on a stock's F&O contracts that, once 95% breached, freezes new positions and triggers the dreaded ban period.

Definition →

Securities Transaction Tax (STT)

A mandatory direct tax on every equity and F&O trade on Indian exchanges — collected at source and embedded in your brokerage contract note.

Definition →
Settlement & Expiry

American Option

An option you can exercise any trading day up to expiry — the style of NSE stock options.

Definition →

Cash Settlement

Settling a contract on expiry by exchanging the cash difference only — no shares ever change hands.

Definition →

European Option

An option you can exercise only on the expiry date — the style of all NSE index options.

Definition →

Expiry

The date an option contract ends — and the clock that governs its entire value.

Definition →

Physical Settlement

When a derivative is settled on expiry by delivering the actual underlying shares, not just exchanging cash.

Definition →

Weekly Expiry

An option that expires every week — short-dated, fast-decaying and highly traded.

Definition →
Technical Analysis

Average Directional Index (ADX)

A 0–100 scale that measures how strong a trend is, not which direction — so you know when to ride momentum and when to stay flat.

Definition →

Average True Range (ATR)

A volatility indicator that tells you how much a stock or index typically moves in a single session — essential for sizing stops and positions.

Definition →

Bollinger Bands

Dynamic price envelopes built around a moving average using standard deviation, which widen during high-volatility periods and squeeze together when markets are quiet.

Definition →

Commodity Channel Index (CCI)

An unbounded oscillator that measures how far the current price deviates from its recent average, flagging overbought and oversold extremes and momentum shifts.

Definition →

Death Cross

A bearish technical signal formed when the short-term moving average crosses below the long-term moving average, warning of a potential sustained downtrend.

Definition →

Divergence

When price and a momentum oscillator tell different stories — a mismatch that often warns of an impending reversal before price itself confirms it.

Definition →

Exponential Moving Average (EMA)

A moving average that places greater weight on the most recent prices, making it more responsive to trend changes than a simple moving average of the same period.

Definition →

Fibonacci Retracement

Horizontal price levels based on Fibonacci ratios that mark where a pullback within a trend may find support or resistance before the trend resumes.

Definition →

Golden Cross

A widely-watched bullish signal that occurs when the short-term moving average crosses above the long-term moving average, signalling a potential shift to an uptrend.

Definition →

Ichimoku Cloud

A Japanese all-in-one indicator that simultaneously displays trend direction, momentum, and forward-projected support and resistance in a single chart overlay.

Definition →

MACD

A trend-following momentum indicator that tracks the relationship between two exponential moving averages to reveal shifts in direction and strength.

Definition →

Momentum Indicator

A class of technical tools that measures the speed and strength of price change to gauge whether a trend is accelerating, stalling, or reversing.

Definition →

Moving Average

A line that continuously averages price over a rolling period, smoothing out noise to reveal the underlying direction of a trend.

Definition →

On-Balance Volume (OBV)

A cumulative volume indicator that tracks whether smart money is quietly accumulating or distributing a stock before the price move becomes obvious.

Definition →

Overbought

A momentum condition where a security has risen so sharply that indicators like RSI flash a warning — though in strong trends, it can stay overbought longer than bears expect.

Definition →

Oversold

A momentum condition where a security has fallen so sharply that indicators like RSI drop below 30 — a signal that selling may be exhausted, though in downtrends it can stay there far longer than buyers hope.

Definition →

Parabolic SAR

A trend-following indicator that plots dynamic stop-and-reverse levels above or below price, providing both trailing stop guidance and potential trend reversal signals.

Definition →

Pivot Points

Mathematically derived price levels calculated from the prior session's high, low and close — the intraday trader's pre-built support and resistance map.

Definition →

Relative Strength Index (RSI)

A momentum oscillator scaled from 0 to 100 that measures the speed and size of recent price changes to flag overbought or oversold conditions.

Definition →

Resistance

A price ceiling where sellers consistently overpower buyers — the level a rally struggles to break through.

Definition →

Simple Moving Average (SMA)

The arithmetic mean of a security's closing prices over a fixed number of periods, used to smooth noise and identify the direction of a trend.

Definition →

Stochastic Oscillator

A momentum indicator that measures where the closing price sits within a recent high-low range, flagging overbought and oversold conditions.

Definition →

Supertrend

An ATR-based overlay that sits on the price chart and flips between bullish and bearish, giving traders a clear visual signal of trend direction.

Definition →

Support

A price level where buying demand has repeatedly cushioned a decline — the floor the market keeps returning to.

Definition →

Trendline

A diagonal line connecting successive swing highs or lows that maps the slope and direction of a market trend.

Definition →
Chart Patterns

Ascending Triangle

A bullish continuation pattern where buyers keep raising their bids while sellers hold a fixed line — a coiling tension that typically explodes upward on the breakout.

Definition →

Bear Flag

The bearish mirror of the bull flag — a steep sell-off followed by a tepid drift higher that fools latecomers before the next leg down.

Definition →

Breakdown

When price slices through a key support level on meaningful volume, alerting traders that bears have taken firm control.

Definition →

Breakout

When price punches through a key resistance level on strong volume, signalling that buyers have decisively taken control.

Definition →

Bull Flag

A powerful momentum setup — a near-vertical surge followed by a calm, drifting pullback that sets the stage for the next leg up.

Definition →

Cup and Handle

A bullish continuation pattern shaped like a teacup — a long, rounded base followed by a brief consolidation — that often precedes powerful breakout moves in stocks and indices.

Definition →

Descending Triangle

A bearish consolidation pattern where sellers press prices lower while a flat support holds — until it doesn't.

Definition →

Doji

A cross-shaped candle where buyers and sellers end the session at a standoff, warning that the current trend may be losing steam.

Definition →

Double Bottom

A bullish reversal pattern where price tests the same support twice without breaking lower — signalling that sellers are exhausted and buyers are ready to take charge.

Definition →

Double Top

A bearish reversal pattern where price tests the same resistance level twice and fails both times — a clear signal that bulls are running out of steam.

Definition →

Engulfing Pattern

A two-candle formation where the second bar completely swallows the first, marking one of the most decisive candlestick signals of a trend reversal.

Definition →

Evening Star

A three-candle bearish reversal pattern that warns of a potential trend top after an extended rally.

Definition →

Falling Wedge

Price drifts lower in a tightening channel, but sellers are losing steam — a bullish breakout is typically waiting at the apex.

Definition →

Gap Down

When the market opens sharply below the prior close, leaving a price void on the chart that signals sudden seller dominance.

Definition →

Gap Up

When the market opens sharply above the previous close, leaving an empty price zone — and a critical decision point for traders.

Definition →

Hammer Candlestick

A single-candle pattern where sellers hammered prices lower but buyers pushed back hard — a classic early sign of a potential bullish reversal.

Definition →

Harami

A two-candle reversal signal where a small candle is cradled inside the prior session's large candle body, marking a potential pause or turn in trend.

Definition →

Head and Shoulders

One of the most reliable bearish reversal patterns in technical analysis — three peaks where the middle stands tallest, warning that bulls are losing control.

Definition →

Inverse Head and Shoulders

A three-trough bullish reversal pattern that signals the end of a downtrend and a likely shift to upside momentum.

Definition →

Marubozu

A shadowless candle that shows one side owned the session from the opening bell to the close — one of the clearest signals of dominant trend momentum.

Definition →

Morning Star

A three-candle sequence that narrates a full sentiment shift — from bearish dominance to indecision to bullish recovery — and is one of the most trusted reversal signals in technical analysis.

Definition →

Pennant

A brief consolidation in a converging triangle after a sharp price surge — a pause before the trend resumes with renewed momentum.

Definition →

Rising Wedge

Price climbs in a tightening channel — but each new high carries less conviction, warning that the rally is running out of fuel.

Definition →

Shooting Star

Buyers launched prices skyward but sellers dragged them back down — this single candle is one of the most recognised warnings that an uptrend is failing.

Definition →

Symmetrical Triangle

A coiling consolidation pattern where falling highs and rising lows converge — the market is holding its breath before a decisive move.

Definition →
Trading Styles

Algorithmic Trading

A trading style where computer programs automatically generate, route, and manage orders based on pre-defined rules, removing emotion and enabling speeds no human trader can match.

Definition →

Arbitrage

The simultaneous purchase and sale of the same or equivalent security across different markets or instruments to lock in a profit from a pricing discrepancy, ideally with no net directional risk.

Definition →

Backtesting

The process of running a trading strategy against historical market data to measure how it would have performed, before committing real capital to live markets.

Definition →

BTST (Buy Today Sell Tomorrow)

A short-term equity strategy where you buy shares during the day and sell them the very next trading session, capturing overnight price moves before formal delivery settles.

Definition →

Intraday Trading

A trading style where every position — long or short — is opened and closed within the same market session, eliminating overnight gap risk entirely.

Definition →

Jobbing

An ultra-short-term trading style focused on capturing tiny price differentials by rapidly flipping positions, often holding for just seconds at a time.

Definition →

Mean Reversion

The principle that prices, volatility, or any financial metric stretched far from its historical average will eventually pull back — forming the foundation of a wide class of contrarian trading strategies.

Definition →

Momentum Trading

A trading approach that buys securities already moving strongly in one direction, betting that price persistence — not reversal — is the more reliable near-term outcome.

Definition →

Paper Trading

A risk-free simulation method where traders practise buying and selling with virtual capital to develop and validate strategies before deploying real money.

Definition →

Positional Trading

A medium-to-long-term approach that holds trades for weeks to months, targeting large trend-driven price moves across NSE stocks and index futures.

Definition →

Scalping

A hyper-short-term trading style where traders capture many small price moves throughout the session, each held for seconds to a few minutes.

Definition →

STBT (Sell Today Buy Tomorrow)

The bearish counterpart to BTST — sell a futures or options position today and cover it the following session, aiming to profit from an anticipated overnight decline.

Definition →

Swing Trading

A medium-term trading style that holds positions for days to weeks, aiming to capture one clean directional price swing using technical setups.

Definition →

Trend Following

A systematic methodology that enters trades only in the direction of an established price trend and exits when objective signals indicate the trend has reversed — never predicting, always reacting.

Definition →
Market Structure (India)

Additional Surveillance Measure (ASM)

A SEBI-driven framework that places higher margin requirements on stocks showing abnormal price movements, volume concentration, or volatility spikes, without restricting when they can be traded.

Definition →

Auction Market

A special exchange session where shares that a seller failed to deliver are sourced from willing participants, with the defaulting seller bearing any cost difference plus a penalty.

Definition →

Bombay Stock Exchange (BSE)

Asia's oldest stock exchange, established in 1875, and the home of the Sensex — India's most widely reported equity market benchmark and the barometer of the nation's economic sentiment.

Definition →

Circuit Breaker

The index-level safety valve on NSE and BSE that pauses all trading — equities and derivatives — when markets move beyond 10%, 15%, or 20% in a single session.

Definition →

Clearing Corporation

The central counterparty that stands between every buyer and seller in Indian markets, collecting margins and guaranteeing that trades settle even if one party defaults.

Definition →

Demat Account

The electronic vault that holds your Indian securities — shares, bonds, ETFs, and sovereign gold bonds — eliminating the need for physical share certificates.

Definition →

Graded Surveillance Measure (GSM)

A SEBI framework that applies escalating trading restrictions to stocks whose price movements are disproportionate to their underlying financial fundamentals, acting as a deterrent against price manipulation.

Definition →

ISIN

A 12-character global code that uniquely identifies every listed security, from equities to bonds, across NSE, BSE, and depositories worldwide.

Definition →

National Stock Exchange (NSE)

India's largest and most liquid stock exchange, home to the Nifty 50 index and the world's most actively traded index options and futures contracts.

Definition →

Post-Market Session

The 20-minute closing call auction (3:40–4:00 PM IST) on NSE and BSE that lets equity investors transact at the day's official closing price after regular trading has ended.

Definition →

Pre-Open Session

The 15-minute call auction window (9:00–9:15 AM IST) on NSE and BSE that absorbs overnight news flow and discovers the fair opening price before continuous trading begins.

Definition →

SEBI

India's statutory capital markets regulator — the body that sets the rules for exchanges, brokers, listed companies, and every F&O contract you trade on NSE or BSE.

Definition →

T+1 Settlement

India's equity settlement cycle that transfers shares and funds between buyer and seller by the very next business day after a trade is executed.

Definition →

Trading Account

The execution layer of Indian investing — the broker account through which every buy and sell order on NSE, BSE, or MCX is placed and matched.

Definition →

UPI Mandate (ASBA)

A SEBI mechanism for IPO applications that blocks funds in the investor's own bank account via UPI, debiting money only upon allotment and keeping the unallotted amount earning interest throughout the subscription window.

Definition →
Corporate Actions

Bonus Issue

Free additional shares credited to existing shareholders from company reserves, signalling strong retained earnings while improving stock liquidity on NSE and BSE.

Definition →

Corporate Action Adjustment

A revision to futures and options contract parameters — strike prices, lot sizes, and settlement prices — made by NSE to preserve the economic value of open positions when a corporate action mechanically alters the underlying share price.

Definition →

Delisting

The permanent removal of a company's shares from a stock exchange, ending public trading and triggering a mandatory exit offer for retail shareholders.

Definition →

Dividend

A share of company profits paid out to shareholders, with implications for the stock price, F&O positions, and delivery-based holdings on NSE and BSE.

Definition →

Ex-Dividend Date

The first trading day on which a stock trades without the entitlement to an upcoming dividend, causing a reference price adjustment on NSE and BSE.

Definition →

Follow-on Public Offer (FPO)

A share issuance by an already-listed company that raises fresh capital from the public, often at a discount to the market price.

Definition →

Initial Public Offering (IPO)

The first time a private company offers its shares to public investors and lists on NSE or BSE, creating a publicly traded instrument subject to SEBI disclosure requirements and opening the path to eventual F&O eligibility.

Definition →

Merger and Acquisition

A merger combines two companies into a single entity, while an acquisition involves one company purchasing a controlling stake in another — both are transformative corporate actions that significantly affect share prices, ownership structure, and any outstanding derivatives on NSE or BSE.

Definition →

Record Date

The date on which a company takes a snapshot of its shareholder register to determine who is eligible for dividends, bonus shares, rights issues, or other corporate benefits.

Definition →

Rights Issue

A fundraising mechanism where a company offers existing shareholders the right to purchase additional shares at a discounted price, proportional to their current holding, before the offer opens to new investors.

Definition →

Share Buyback

A corporate action in which a company repurchases its own outstanding shares from the market, shrinking the share count to return capital to shareholders and typically boosting earnings per share.

Definition →

Special Dividend

A one-time, non-recurring cash payout to shareholders funded by an extraordinary windfall, asset sale, or large accumulated surplus — distinct from a company's regular dividend schedule and often large enough to materially move the stock price on the ex-date.

Definition →

Stock Split

A corporate action that divides each existing share into multiple shares at a lower face value, making the stock more affordable without changing shareholders' proportional ownership.

Definition →
Risk & Performance

Drawdown

The peak-to-trough decline in a portfolio or trading account's value, expressing how much capital was lost before a recovery to a new high.

Definition →

Expectancy

The average rupee profit or loss generated per trade over many repetitions — the single most important number for confirming whether a trading strategy has a genuine edge or is just running on luck.

Definition →

Kelly Criterion

A mathematical formula for calculating the theoretically optimal fraction of capital to risk on each trade, maximising long-run compounded growth while avoiding the catastrophic losses that come from over-betting.

Definition →

Maximum Drawdown

The single largest peak-to-trough loss ever recorded in a portfolio or strategy — the definitive worst-case loss benchmark for risk evaluation.

Definition →

Risk of Ruin

The probability that a trading account is wiped out — or falls below a survivable threshold — before a profit target is reached, driven by win rate, payoff ratio, and position sizing.

Definition →

Sharpe Ratio

A risk-adjusted performance metric that measures how much return a strategy earns per unit of total volatility, enabling apples-to-apples comparison across different trading approaches.

Definition →

Sortino Ratio

A refinement of the Sharpe Ratio that measures return per unit of downside risk only, making it a fairer judge of strategies whose volatility is skewed toward gains rather than losses.

Definition →

Win Rate

The percentage of trades that close at a profit — a key performance metric that only tells the full story when read alongside average trade size and expectancy.

Definition →

Go deeper — free guides & live tools

Read the full guides in TradePulse Learn or apply the concepts on the live option chain.

Explore TradePulse Learn Live option chain