Glossary A–Z

Every concept and strategy BOSS explains, from A to Z, each linked to the page that explains it with live data.

A

Adjustment signals and comparing the alternatives Concept: Adjustment signals are facts about an open position, such as a sold leg the price has reached or margin use near its limit, that often lead a trader to consider closing, rolling or adjusting it; comparing the alternatives means pricing each one at execution and judging the whole position it leaves, not only the credit it brings in.

B

Backtesting option strategies Concept: Backtesting replays a strategy over historical market data to see how it would have performed, entering and exiting at the prices of the time, and measures the result with statistics such as win rate, total P&L and maximum drawdown.
Bear Call Spread Strategy: Selling a lower-strike call and buying a higher-strike call in the same expiry, collecting a net credit that is kept in full if the underlying stays below…
Bear Put Spread Strategy: Buying a higher-strike put and selling a lower-strike put in the same expiry, trading away extra downside for a lower cost of entry.
Bid, ask, slippage and fees Concept: Every option has a bid (the best price someone will pay) and an ask (the best price someone will sell at); trading at once means buying at the ask and selling at the bid, and that gap from the mid-price, plus the venue's trading fee, is the real cost of entering a trade.
Black-Scholes and Black-76 Concept: Black-Scholes is the classic model that prices a European option from the underlying's price, the strike, time, the interest rate and volatility; Black-76 is its version written on the forward, which is how crypto options are priced.
Box spread Concept: A box spread combines a bull call spread and a bear put spread on the same two strikes and expiry, so it pays exactly the strike width at expiry whatever the underlying does; its price today therefore implies an interest rate.
Breakeven Concept: The underlying price at expiration where a strategy's profit is exactly zero -- above or below it, the position moves into profit or loss.
Bull Call Spread Strategy: Buying a lower-strike call and selling a higher-strike call in the same expiry, trading away unlimited upside for a lower cost of entry.
Bull Put Spread Strategy: Selling a higher-strike put and buying a lower-strike put in the same expiry, collecting a net credit that is kept in full if the underlying stays above…

C

Call Diagonal Spread Strategy: Buying a longer-dated call at a lower strike and selling a near-term call at a higher strike, combining a calendar's time-decay edge with a bullish…
Call Ratio Backspread Strategy: Selling one at-the-money call and buying two calls further out of the money, the inverse of a call ratio spread, set up for a big rally rather than a pin.
Call Ratio Spread (Front Spread) Strategy: Buying one at-the-money call and selling two calls further out of the money, financing most or all of the long call with the extra short premium.
Calls and puts Concept: A call is the right to buy the underlying at the strike and gains when the price rises; a put is the right to sell it at the strike and gains when the price falls; each can be bought (long) or sold (short), which gives the four basic positions every strategy is built from.
Capped / Uncapped Concept: Whether a strategy's maximum loss (risk) or maximum gain (reward) is a known, bounded number, or can grow without a fixed limit.
Covered Call Strategy: Holding the underlying while selling a call against it, trading away upside above the strike for immediate premium income.
Covered Put Strategy: Holding a short position in the underlying while selling a put against it, collecting premium in exchange for capping the gain on the short.

D

Delta Concept: Delta is how much an option's price is expected to change for a $1 move in the underlying: a call's delta runs from 0 to 1, a put's from −1 to 0, and an at-the-money option sits near ±0.5.
Diagonal Butterfly Strategy: A short iron butterfly whose protective wings sit in a later expiry than the body, trading a wider near-term profit zone for extra complexity.
Double Diagonal Strategy: A calendar spread on both the call and put side at once: near-term short strangle against a longer-dated, wider long strangle.
DVOL (Deribit Volatility Index) Concept: DVOL is Deribit's implied volatility index for bitcoin and ether: a 30-day expected volatility computed from the prices of Deribit's own options across a wide range of strikes, with a methodology modeled on the VIX, quoted as an annualized percentage.

E

Exercise and assignment Concept: Exercise is the holder using an option's right to buy or sell at the strike, and assignment is the seller being required to fulfil it; the options on Deribit, OKX and Bybit are European and cash-settled, so exercise happens only at expiry, automatically, as a payment of intrinsic value.
Expiration cycles Concept: Deribit, OKX and Bybit list crypto option expiries on overlapping cycles, daily, weekly on Fridays, monthly on the last Friday of the month and quarterly on the last Friday of March, June, September and December, all expiring at 08:00 UTC.
Expiry Concept: The date after which an option no longer exists and settles based on the underlying's price at that time.

F

Fee Concept: What the venue charges to trade a contract: a small percentage of the underlying's price, capped at a percentage of the option's own price, so cheap options pay less.
Forward price Concept: The price agreed today for the underlying on a future date -- for an option, its expiry. Set by the futures market, it usually sits a little above spot, and it is the price options are valued against.
Forward price and basis Concept: The forward price is the price agreed today for buying the underlying at a given expiry; the basis is how far it sits above or below spot, forward / spot − 1, and its annualized value is the market's carry for that horizon.

G

Gamma Concept: Gamma is how much an option's delta changes for a $1 move in the underlying; it is largest for at-the-money options close to expiry, and it is why an option's gains and losses are not a straight line.

H

How BOSS classifies strategies Concept: BOSS classifies each of its 58 strategies along six dimensions: proficiency level, market direction, volatility outlook, whether risk is capped, whether reward is capped, and whether it aims for income or capital gain.

I

Implied volatility (IV) Concept: Implied volatility is the volatility of the underlying that, plugged into an option pricing model, reproduces an option's market price: the market's price for expected movement, which includes a risk premium, quoted as an annualized percentage.
Implied vs. realized volatility Concept: Comparing implied with realized volatility asks whether options are priced for more movement than the underlying is delivering; IV usually sits above RV, and that gap, the volatility risk premium, is what option sellers try to collect.
Index price and mark price Concept: The index price is a venue's reference spot price, computed from several spot exchanges; the mark price is the venue's own fair value for an instrument, used for margin and liquidation, which is neither a bid, an ask nor a guaranteed fill.
Intrinsic value and time value Concept: An option's premium splits into intrinsic value, what it would pay if it settled at today's forward, and time value (extrinsic value), the rest, which the market charges for the chance of a further move and which decays to zero by expiry.
Inverse vs linear options Concept: Inverse options are quoted, margined and settled in the coin itself, like the coin-margined BTC and ETH options BOSS follows on Deribit and OKX; linear options are quoted and settled in a stablecoin, like the ones BOSS follows on Bybit, so their payoff in dollars is the textbook one.

L

Leg Concept: One individual option (or underlying position) within a multi-part strategy.
Liquidation Concept: Liquidation is the venue forcibly closing some or all of a margined position, for a fee, once the account's equity no longer covers the position's maintenance margin.
Long Box Strategy: Combining a bull call spread and a bear put spread on the same two strikes, locking in a fixed payoff at expiry regardless of where the underlying settles.
Long Call Strategy: Buying a call option to profit from a rise in the underlying, paying a fixed premium for uncapped upside participation.
Long Call Butterfly Strategy: Buying one call below, selling two calls at, and buying one call above a target strike, all the same expiry, to profit from the underlying pinning near…
Long Call Calendar Spread Strategy: Selling a near-term call and buying a longer-dated call at the same strike, harvesting the faster time decay of the short-dated option.
Long Call Condor Strategy: Buying a lower call, selling two calls at the next two strikes up, and buying a higher call, to profit from the underlying settling in the middle range.
Long Call Ladder (Christmas Tree) Strategy: A call ratio spread extended with a third, higher strike: buying a lower call and selling one call at each of two higher strikes.
Long Combo Strategy: Buying an out-of-the-money call and selling an out-of-the-money put, a cheaper, more leveraged stand-in for holding the underlying.
Long Guts Strategy: Buying an in-the-money call and an in-the-money put, a more expensive, higher-floor cousin of the long strangle built entirely from in-the-money strikes.
Long Iron Butterfly Strategy: Buying an at-the-money call and put and selling an out-of-the-money call and put, paying a net debit that pays out most if the underlying moves well away…
Long Iron Condor Strategy: Buying a put spread below the market and a call spread above it, paying a net debit that pays out if the underlying moves outside the two long strikes.
Long Put Strategy: Buying a put option to profit from a decline in the underlying, paying a fixed premium for downside participation.
Long Put Butterfly Strategy: The put-only equivalent of the long call butterfly: buying one put below, selling two puts at, and buying one put above a target strike.
Long Put Calendar Spread Strategy: The put-only equivalent of the long call calendar spread: selling a near-term put and buying a longer-dated put at the same strike.
Long Put Condor Strategy: The put-only equivalent of the long call condor: buying a lower put, selling two puts at the next two strikes up, and buying a higher put.
Long Put Ladder Strategy: A put ratio spread extended with a third, lower strike: buying a higher put and selling one put at each of two lower strikes.
Long Straddle Strategy: Buying a call and a put at the same strike and expiry, profiting from a large move in either direction.
Long Strangle Strategy: Buying an out-of-the-money call and an out-of-the-money put, a cheaper version of the long straddle that needs a bigger move to pay off.

M

Managing positions: closing, rolling and adjusting Concept: Managing an options position means deciding, before expiry, whether to close it, roll it to another expiry or strike, or adjust one of its legs, weighing what is left to gain against the risk still carried and the cost of trading out.
Margin Concept: Margin is the collateral a venue requires you to hold against a position that can lose more than it cost, mainly sold options: initial margin to open it, and maintenance margin to keep it open, below which the position is liquidated.
Moneyness Concept: Where a strike sits relative to the current underlying price: in the money (has intrinsic value), at the money (strike close to the current price), or out of the money (no intrinsic value).
Moneyness: in, at and out of the money Concept: Moneyness describes where an option's strike sits relative to the underlying's price: in the money if it would pay something were it settled at the current forward price, at the money if the strike is about equal to the price, and out of the money if it would pay nothing.

N

Net Debit / Net Credit Concept: Whether a strategy costs money to enter (debit) or pays money up front (credit), summed across all its legs.

P

P&L attribution Concept: P&L attribution splits the change in an option position's value into what the underlying's move explains (delta and gamma), what the change in implied volatility explains (vega), what time passing explains (theta), and a residual the Greeks don't capture.
Payoff, breakeven and max profit/loss Concept: A strategy's payoff is what it is worth at expiry at each settlement price; subtracting what it cost gives its profit or loss, whose zero crossings are the breakevens and whose highest and lowest points are the maximum profit and maximum loss.
Position Greeks Concept: Position Greeks are a strategy's net delta, gamma, vega, theta and rho: each leg's Greeks multiplied by its size and by +1 if bought or −1 if sold, then added up, so a multi-leg structure reads as one single exposure.
Premium Concept: The price paid (if long) or received (if short) for an option, per contract.
Pricing across venues Concept: An option with the same strike and expiry trades at different prices on different venues because each has its own order book, forward, index, fees and margin rules; the fair comparison is at execution, after fees.
Probability of profit (PoP) Concept: Probability of profit is the estimated chance that a strategy ends with a gain at expiry, after its entry costs; BOSS computes it from a lognormal distribution around the expiry's forward at the at-the-money implied volatility.
Protective Call Strategy: Buying a call to cap the otherwise uncapped upside risk of a short position in the underlying.
Protective Put (Married Put) Strategy: Buying a put alongside a long position in the underlying to insure against a decline while keeping unlimited upside.
Put Diagonal Spread Strategy: Buying a longer-dated put at a higher strike and selling a near-term put at a lower strike, combining a calendar's time-decay edge with a bearish…
Put Ratio Backspread Strategy: Selling one at-the-money put and buying two puts further out of the money, the inverse of a put ratio spread, set up for a sharp decline rather than a pin.
Put Ratio Spread (Front Spread) Strategy: Buying one at-the-money put and selling two puts further out of the money, financing most or all of the long put with the extra short premium.
Put-call parity Concept: Put-call parity is the no-arbitrage relationship between a European call and put with the same strike and expiry: the call's price minus the put's price equals the forward price minus the strike (discounted to today).

R

Realized volatility (RV) Concept: Realized volatility is how much the underlying actually moved over a past window, measured as the standard deviation of its daily log returns and annualized, so it can be compared directly with implied volatility.
Rho Concept: Rho is how much an option's price is expected to change for a one-percentage-point change in interest rates; calls have positive rho, puts negative, and for short-dated crypto options it has the smallest dollar effect of the Greeks.

S

Settlement and delivery Concept: At expiry, crypto options on Deribit, OKX and Bybit settle in cash: each option pays its intrinsic value measured against the venue's official delivery price, and the position disappears from the account, leaving only the cash difference.
Short Box Strategy: Selling a bull call spread and a bear put spread on the same two strikes, collecting a fixed amount up front against a fixed obligation at expiry --…
Short Call (Naked Call) Strategy: Selling a call option uncovered to collect premium, betting the underlying stays below the strike through expiry.
Short Call Butterfly Strategy: The mirror image of the long call butterfly: selling the wings and buying the body, profiting when the underlying moves away from the middle strike in…
Short Call Calendar Spread Strategy: The reverse of the long call calendar spread: buying the near-term call and selling the longer-dated one, a less common structure used when near-term…
Short Call Condor Strategy: The mirror image of the long call condor: selling the wings and buying the body, profiting when the underlying finishes outside the middle range.
Short Call Ladder Strategy: The inverse of the long call ladder: selling a lower call and buying one call at each of two higher strikes, for a trader positioned for either a…
Short Combo Strategy: Selling an out-of-the-money call and buying an out-of-the-money put, a cheaper, more leveraged stand-in for a short position in the underlying.
Short Guts Strategy: Selling an in-the-money call and an in-the-money put, collecting a large premium on a bet that the underlying stays within a fairly wide range.
Short Iron Butterfly Strategy: Selling an at-the-money call and put and buying an out-of-the-money call and put for protection, collecting a net credit that pays out most if the…
Short Iron Condor Strategy: Selling a put spread below the market and a call spread above it, collecting a net credit that is kept in full if the underlying stays between the two…
Short Put (Naked Put) Strategy: Selling a put option uncovered to collect premium, betting the underlying stays above the strike through expiry.
Short Put Butterfly Strategy: The put-only equivalent of the short call butterfly: selling the wings and buying the body, profiting when the underlying moves away from the middle…
Short Put Calendar Spread Strategy: The put-only equivalent of the short call calendar spread: buying the near-term put and selling the longer-dated one.
Short Put Condor Strategy: The put-only equivalent of the short call condor: selling the wings and buying the body, profiting when the underlying finishes outside the middle range.
Short Put Ladder Strategy: The inverse of the long put ladder: selling a higher put and buying one put at each of two lower strikes, for a trader positioned for either a flat/up…
Short Straddle Strategy: Selling a call and a put at the same strike and expiry, collecting double premium on a bet that the underlying stays close to the strike.
Short Strangle Strategy: Selling an out-of-the-money call and an out-of-the-money put, collecting premium on a bet that the underlying stays within a range.
Slippage Concept: The extra cost of filling an order immediately by crossing the bid-ask spread, instead of at the theoretical mid-price.
Strap Strategy: A long straddle weighted toward calls: two calls and one put at the same strike, for a trader who expects a big move but leans bullish.
Strategy anatomy: legs, width and wings Concept: A strategy is a set of legs, each one a call, put or underlying position bought or sold in a given ratio at a strike and expiry; its shape is described by the width between strikes, its body and wings, and for calendars a near and a far expiry.
Strike Concept: The fixed price at which an option's holder may buy (call) or sell (put) the underlying.
Strike, expiry and premium Concept: Every option is defined by its strike (the price its payout is measured from), its expiry (the moment it settles) and its premium (the price paid for it), all for one contract of a fixed size in the underlying.
Strip Strategy: A long straddle weighted toward puts: one call and two puts at the same strike, for a trader who expects a big move but leans bearish.
Synthetic Long Call Strategy: Holding the underlying and buying a put at the same strike, replicating the payoff of a long call using the underlying and a put instead of a call.
Synthetic Long Put Strategy: Shorting the underlying and buying a call at the same strike, replicating the payoff of a long put using a short position in the underlying (typically a…
Synthetic Long Stock Strategy: Buying a call and selling a put at the same strike and expiry, replicating the payoff of owning the underlying outright without buying it directly.…
Synthetic Short Call Strategy: Shorting the underlying and selling a put at the same strike, replicating the payoff of a short call using a short position in the underlying (typically a…
Synthetic Short Put Strategy: Holding the underlying and selling a call at the same strike, replicating the payoff of a short put using the underlying and a call instead of a put --…
Synthetic Short Stock Strategy: Selling a call and buying a put at the same strike and expiry, replicating the payoff of a short position in the underlying without shorting it directly.…

T

Term structure of volatility Concept: The term structure of volatility is at-the-money implied volatility plotted against time to expiry; it normally slopes upward (contango), and it inverts (backwardation) when the market expects turbulence in the near term.
Theta Concept: Theta is how much an option's value is expected to change per day from time passing alone, with price and implied volatility unchanged; it is negative for options you own (that is the value they lose each day), and the decay accelerates as expiry approaches.

V

Vega Concept: Vega is how much an option's price is expected to change for a one-percentage-point change in implied volatility; long options have positive vega, and longer-dated, at-the-money options have the most.
Volatility skew and risk reversal Concept: Volatility skew is how implied volatility tilts across an expiry's strikes, measured at 25 delta: put skew is 25-delta put IV minus at-the-money IV, and the risk reversal, 25-delta call IV minus 25-delta put IV, sums up the tilt between the wings in one signed number.
Volatility smile Concept: The volatility smile is the shape implied volatility takes across strikes for a single expiry: usually lowest near the money and higher in the wings, and in crypto tilted toward whichever side the market is paying up for: usually the puts in sell-offs and bear phases, often the calls in strong rallies.
Volatility surface Concept: The volatility surface is implied volatility across both strike and expiry at once, the smile of every expiry laid along the term structure; traders usually read it by delta rather than by strike, so expiries compare on equal terms.

W

What is an option? Concept: An option is a contract that gives its buyer the right, but not the obligation, to buy or sell an underlying asset at a fixed price (the strike) on a fixed date (the expiry), in exchange for a price paid up front (the premium).